TLDR:
- UAE regulators closed both stock exchanges for two days to prevent panic selling following missile and drone attacks.
- The Abu Dhabi Securities Exchange has about $700 billion in market capitalization, putting billions at risk of being lost.
- Polymarket estimates the probability of a closure of the Strait of Hormuz at 48.5%, posing a threat to global oil and LNG supplies.
- War risk insurance has risen by 50% and Hapag-Lloyd has suspended strait transit, signaling growing concern in the market.
Markets in the UAE are closed on Monday and Tuesday following a large-scale missile and drone attack on the country.
The UAE Capital Market Authority has ordered both the Abu Dhabi Securities Exchange and the Dubai Financial Market to suspend trading.
The move came after 165 ballistic missiles, 541 drones and two cruise missiles hit the UAE over 48 hours. Three people were killed and 58 others were injured. Fire broke out at Jebel Ali port and debris hit the Burj Al Arab hotel.
Stock market closure indicates a crisis of confidence
The regulator’s decision to halt trading was not due to a holiday or a technical glitch. It was a direct response to the threat of panic selling on the trading floor.
The Abu Dhabi Securities Exchange alone has a market capitalization of approximately $700 billion. A single session of fear-driven selling could have wiped out billions in value in a matter of hours.
Analyst Shanaka Anslem Perera noted on X that this is the first time Dubai’s financial market has gone dark outside of a pandemic.
That’s what he wrote ‘Financial markets do not operate according to military standards’ adding that they run on trust instead. That trust took a visible hit when shrapnel killed a civilian and debris fell on a Palm Jumeirah hotel.
Saudi Arabia The Tadawul index fell more than 4% on Sunday, while Egyptian markets fell more than 5%. UAE regulators opted to avoid a similar outcome by turning off the screens completely. This move bought time, but the deeper question about investor confidence remains unanswered.
Regional markets have long relied on the stability of the Gulf to attract global capital. That stability is now under direct pressure from continued military activity.
The risk from the Strait of Hormuz increases the financial pressure
In addition to the stock market closures, broader risks in the energy market are now also in focus. Polymarket is currently touting the likelihood of a Strait of Hormuz closing on March 31 at 48.5%.
Insurance against war risks has reportedly increased by 50% and Hapag-Lloyd has suspended the passage of ships through the strait. About 20 million barrels of oil and almost 20% of global LNG exports pass through this narrow waterway every day.
A closure of the strait would push oil prices above $100 a barrel almost immediately. That would push U.S. consumer price inflation to 5%, which contradicts U.S. policy goals on energy costs. The financial ripple effects would extend far beyond the Gulf region.
Iran reportedly targeted the UAE not because of a bilateral dispute, but because the country hosts the Al Dhafra air base. The US security umbrella, long seen as a shield for Gulf trade, became a target instead. That shift is changing the way global allocators view risk in the region.
Markets in the UAE are expected to reopen on Wednesday. Whether institutional capital returns at the same pace remains the key question facing the Gulf’s financial centers.
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