Investment Review №351. S&P 500 Hits New Highs

DFM General Index: 1-Year Dynamics

Abu Dhabi Securities Exchange Index: 1-Year Dynamics

Brent Oil, 1-Year Dynamics

 

From July 27 to August 10, 2026, UAE indices posted moderate gains as easing tensions around the Strait of Hormuz and a pullback in oil prices supported sentiment. The Dubai Financial Market General Index (DFMGI) rose to 5,901 from 5,844, up 1.0%, while the Abu Dhabi Securities Exchange General Index (ADXGI/ADI) advanced to 10,085 from 9,845, up 2.4%. Over the period, the S&P 500 outperformed both local benchmarks, climbing to 7,753 from 7,413, up 4.6%, pointing to stronger risk appetite in global markets than in Gulf markets. Brent crude fell to $88/bbl from ~$92/bbl, down 4.5%, amid expectations of a possible U.S.–Iran agreement. However, downside momentum eased after WTI slid 7.7% to $78.70/bbl last week.  

Nearly all sectors closed higher, with only Industrials and Logistics failing to advance. Consumer Discretionary led, gaining 4.74%, driven by Americana Restaurants (+12.75%). Communication Services rose 3.37% on strength in Etisalat/e& (+4.55%). Financials added 2.6%, with notable gains in Phoenix Group (+15.64%), Waha Capital (+12.99%), Abu Dhabi Islamic Bank (+9.55%), First Abu Dhabi Bank (+7.82%), and Abu Dhabi Commercial Bank (+7.49%). Energy rose 1.37%, supported by ADNOC Distribution (+2.26%), ADNOC Gas (+1.48%), and ADNOC Drilling (+0.68%), while Dana Gas declined 0.57%. Utilities gained 1.12%, led by DEWA (+2.97%) and TAQA (+0.38%) ahead of its planned delisting. Consumer Staples gained 1.21%, and Real Estate advanced 0.95%. Industrials and Logistics were the only negative-return sector group, down 0.95%. Laggards included Multiply Group (-3.85%), Emirates Central Cooling (-3.70%), Dubai Investments (-1.63%), and Aramex (-1.18%), while Gulf Navigation (+7.0%) and Dubai Taxi (+4.27%) outperformed.

Yields on UAE Treasury‑bond proxy instruments rose to 5.46% from 5.37% (+8.8 bp), while the U.S. 10Y Treasury yield edged up to 4.69% from 4.67% (+2 bp). As a result, the UAE–UST 10Y spread widened to 77 bp from 70 bp, reversing the prior narrowing. Renewed tensions around the Strait of Hormuz expanded the local risk premium, with UAE yields moving stronger than the UST benchmark.

UAE government bond yields declined to 5.34% from 5.46%. De-escalation in U.S.–Iran tensions compressed the geopolitical risk premium, pushing yields on UAE local bonds lower, while the 10-year U.S. Treasury yield rose to 4.79% from 4.73%. As a result, the spread between UAE local bonds and 10-year USTs narrowed to 55 bps from 73 bps. This extends the post–Strait of Hormuz normalization trend, with UAE local assets proving more sensitive to easing geopolitical risks than U.S. Treasuries.  

Economic Updates

• UAE economic activity remains resilient. The non-oil PMI rose to 52.7 in July 2026 from 50.8 in June, marking the strongest improvement in recent months and signaling a rebound from the temporary slowdown linked to geopolitical tensions.
• Dubai’s real estate market stays very active despite the seasonally quiet summer period. In the week ended August 2, transactions (3,060) totaled $1.96bn, at an average price of roughly $4,690 per sq m. In H1’26, Dubai recorded 320 residential sales above $10m (+23% YoY), with ultra-prime transaction value reaching $6bn, out of a total of 80,509 sales worth $61.67bn.
• TAQA delisting expected. Trading in Abu Dhabi National Energy Company (TAQA) shares was suspended on Friday, August 7, 2026, amid a mandatory acquisition/squeeze-out of the remaining ~1.88% by controlling shareholder Abu Dhabi Power Corporation (a company within L’imad Holding) at AED 2.70 per share; settlement is expected on August 13, 2026. ADPower had earlier increased its stake to 98.12% via the purchase of a block from Two Point Zero Group, triggering the mandatory buyout under UAE regulations.

Corporate News

• e& (formerly Etisalat) reported double-digit revenue and EPS growth in H1’26: consolidated revenue rose 11.6% to $10.37bn, consolidated net income reached $1.63bn, and EBITDA was $4.82bn. The group also announced the sale of its Vodafone Group stake for $5.95bn, enhancing balance-sheet flexibility for capex and M&A.
• Aldar Properties delivered double‑digit earnings growth while maintaining a selective approach to new launches. Net income in H1’26 rose 18% YoY to $1.33bn, EPS increased 17% to $0.144, revenue grew 8% to $4.57bn, and EBITDA expanded 19% to $1.72bn. Meanwhile, total real estate sales declined 34% to $3.29bn, driven by a 46% drop in UAE sales to $2.56bn amid a deliberately cautious new-project launch strategy given local market conditions. This was partly offset by sales growth at international platforms—SODIC in Egypt (+171%) and London Square in the UK (+236%). 
• Emaar Properties reported 21% YoY revenue growth, and a 24% EBITDA increase in H1’26. Revenue amounted to $6.5bn; EBITDA rose to $3.5bn (+24%); pre-tax profit grew 23% to $3.5bn; real estate sales totaled about $7.2bn; and backlog increased 13% YoY to $44.9bn.  
• ADNOC Gas posted results above forecast and advanced a major growth project. Its Q2’26 net income reached $665m, above its $400–600m guidance despite external disruptions during the quarter. The Board approved FID and signed EPC contracts totaling $8.2bn for the next phases of the Rich Gas Development project, lifting the 2030 EBITDA growth target to 60% versus 2023. Following April’s incidents, recovery at the Habshan complex is ahead of schedule, with natural gas deliveries restored to 85% of target. The Board declared a $940m quarterly dividend payable in September 2026, reaffirming 5% annual dividend growth through 2030. Net income guidance is $600–800m for Q3’26 and $3.5–4.0bn for FY26, provided the normalization of maritime operations and pricing conditions in Q4. 

Two-Week Outlook

Oil-price trajectory and U.S.–Iran negotiations remain the primary drivers of UAE market performance. After the recent pullback, crude could trade sideways or rebound this week. Any escalation in the Yemen conflict would be supportive, while successful Houthi strikes on Saudi energy infrastructure or tankers could trigger a sharp price spike. With oil and oil-product markets still tight and a comprehensive U.S.–Iran deal unlikely, a protracted conflict would continue to draw down strategic reserves, providing structural support to prices despite short-term corrections.

Second, earnings season has underscored the resilience of major UAE corporates. Strong H1 and Q2 2026 results from e&, Aldar, Emaar, and ADNOC Gas set a constructive tone for the remaining prints. Meanwhile, the market will watch closely whether Aldar’s selective approach to launching new real estate projects is repeated across the sector.

Third, the geopolitical risk premium continues to normalize. The narrowing spread between UAE sovereign and 10-year U.S. Treasury yields signals reduced sensitivity to Strait of Hormuz risks. The path from here hinges on the durability of de-escalation and the outcome of U.S.–Iran negotiations. Fourth, the real estate sector and ongoing corporate actions continue to provide structural support. Record activity in Dubai’s ultra-luxury real estate segment and a steady PMI at 52.7 should keep local news flow supportive.