Investment Review №331. At zero

DFM General Index: 1-Year Dynamics

 

Abu Dhabi Securities Exchange Index: 1-Year Dynamics

Yield, Forward Rate 1m10y, UAE, 1-Year Dynamics

Brent Oil, 1-Year Dynamics

From October 7 to October 20, 2025, the UAE stock markets exhibited moderate stability amidst global uncertainty. The Dubai Financial Market (DFM) Index rose 0.8%, while the Abu Dhabi Securities Exchange (ADX) gained 0.3%. The price of Brent crude oil decreased by 9.0% during this period, putting pressure on energy stocks. Such performance reflects the increasing diversification of the region’s economy and investor confidence in non-resource sectors. For comparison, the S&P 500 Index slightly decreased by 0.1% over the same period.

The sectors displayed mixed trends. The Consumer Discretionary sector was the top performer, increasing by an average of 2.32%, while the Utilities sector rose by 1.90%. The Energy sector suffered the greatest pressure, losing 2.05%. Among companies, Taaleem Holdings (TAALEEM) shares experienced significant growth, gaining 6.02% on the back of good financial results. Meanwhile, shares of ADNOC Drilling (ADNOCDRILL) lost 4.86% amid lower oil prices.

The yield on UAE Treasury bonds dropped by 56 basis points, while the yield on U.S. Treasury bonds decreased by 17 basis points. This indicates that investors are reassessing credit risks amid lowering geopolitical uncertainty in the region. Currently, the spread with a comparable UST issue is 78 basis points, while over the past 5 years the median spread has been 50 basis points. Improved economic forecasts for the UAE and expectations of a softer monetary policy support the revision of credit risks in the region.

Economic Updates

• On October 9, the Government of Dubai announced plans to develop a new economic zone focused on the digital economy and creative industries. The initiative, dubbed “Dubai Future District 2.0,” aims to create thousands of new jobs and attract global talent and companies, which should further strengthen the emirate’s position as a leading business hub in the region.
• The International Monetary Fund (IMF) has improved the UAE GDP growth forecast for 2025 to 4.8%, 0.8 percentage points higher than the May estimate. Growth in 2026 is projected at 5%. The forecast for Abu Dhabi in 2025 is about 6%, for Dubai — 3.4%. The improvement is prompted by the recovery of oil production in Abu Dhabi and the steady growth of non-resource sectors such as tourism, finance and logistics.

Corporate News

• Dana Gas (DANA: +6.36%) has announced the start of commercial gas sales as part of the KM250 expansion project at the Khor Mor field in the Kurdistan region of Iraq. The project was completed eight months ahead of schedule and increased production capacity by 50% to 750 million standard cubic feet per day.
• Taaleem Holdings (TAALEEM +6.02%) has reported earnings growth for the fiscal year and announced the payment of dividends. In late September, the company also signed two strategic funding agreements totaling 968 million dirhams to support growth plans, including the recent acquisition of Kids First Group and the construction of a new school under the Harrow brand.

Two-Week Outlook

In the short term, oil prices, now experiencing a downward momentum, may recover. However, the fundamental risks are still biased towards lower prices. U.S. import duties, which restrain international trade, as well as an increase in oil production by OPEC+ countries and producers in South America, may have a negative impact on prices. Since the beginning of the year, OPEC+’s quotas have been raised, which has led to an increase in real production.

Despite the pressure in the energy sector, interest in the UAE equity market is expected to persist. Strong reports from financial companies and continued inflows of foreign investment may support the markets. The sustainability of the non-resource economy, confirmed by the latest PMI data, and the revised GDP data serve as additional factors of appeal. Under these conditions, the UAE stock market may continue to show better performance compared to the S&P 500, especially if global geopolitical risks contribute to capital outflow from developed markets.