UAE Markets Update: ADX and DFM post-war note.
Over the past three months, the DFM General Index (DFMGI) has risen roughly 10%, while the FTSE ADX General Index (FADGI) has gained about 3%. On a one-month basis, the two are up 4% and 1% respectively, and measured from their recent lows, they have recovered around 14% and 5%. Both indices bottomed on the 16th of March at AED 5,233.10 (DFMGI) and 9,298.60 (FADGI), their lowest levels since the start of the war. Since then, easing geopolitical tensions have driven a relief rally across the UAE markets.
From a sectoral perspective, the DFM saw the Consumer Discretionary sector perform the best with a significant 48.74% rally from the lows of March 16th to date. One of the best-performing stocks in this sector was Talabat, which rose 77.49% during this time. The sectors that followed were Industrials, with a 19.40% gain, including names like Salik, Air Arabia, and Parkin, among others; and then Communication Services, with a 14.60% gain, with stocks like Emirates Integrated Telecommunications for the same period.
For the ADX, sectors which showed the strongest rebound included Real Estate with a 16.39% total return, followed by Industrials with a 15.31% gain, while Energy claimed the third spot with a 12.75% gain during the same period.
Looking at the current picture, the charts tell us the sentiment-driven rally has run its course. The next catalyst is earnings season, which begins in late July. From there, the market will re-rate the indices on fundamentals rather than momentum. A few sectors to watch during the earnings season are real estate and hotels, banks, insurance, and airlines.
As the environment in the Middle East stabilises, many tourists are expected to travel to and from the region. This would push travel and tourism activity higher, benefiting stocks like Air Arabia and ADNH. Further, the broader real estate sector is expected to recover well in the next quarter, as Emaar Properties and Al Dar, two of the top developers and hotel owners in the UAE, have robust backlogs and revenue growth.
The banking sector is expected to benefit from a large and diversified domestic deposit base and high-quality liquid assets. Banking sector deposits rose by 4.9% in the first four months of 2026 vs December 2025. This was driven primarily by growth in deposits from government (13.6%) and public-sector entities (14.6%). UAE banks continue to hold significant liquidity, with about $73 billion in domestic investments and $187 billion in cash with the Central Bank of the United Arab Emirates as of April 30, 2026. Furthermore, highly liquid assets account for a significant portion of banks’ foreign assets, providing ample capacity to absorb potential capital outflows. Some noteworthy names are ADCB, FAB, ENBD, and Mashreq.
UAE insurers are also expected to remain broadly stable over the year. This is thanks to recent robust earnings contributing to significant capital buffers. Further, there may be higher demand for insurance policies covering war-related risks going forward. Therefore, UAE insurers’ revenue is expected to increase by approximately 10% in 2026. Some names that investors can look out for are EIC, ADNIC, and Sukoon Insurance.
Overall, the outlook for the UAE markets appears to be filled with robust growth next quarter. This is backed by business-friendly government policies, leading infrastructure, and a low tax regime, which have all contributed to non oil growth averaging about 7% over the past five years.
