Cautious optimism? What cautious optimism? It’s almost exactly one month since we were at the first gathering of investment bankers, global fund and portfolio managers, analysts, and top company execs after US President Donald Trump’s so-called “liberation day” out of Dubai — and at a different gathering of a similar crowd of people just one month later, the mood has shifted pretty significantly. What was then a broad sense of “cautious optimism” has now turned into sheer optimism around the prospects for the Dubai, UAE, and even GCC, economy against the backdrop of a shifting world order.

At the EFG Hermes One on One, analysts and bankers were weighing the risks facing the region against the strong fundamentals it has developed over the past few years. Yesterday, at the Dubai Capital Market Summit, global economists and analysts were listing all the ways in which Dubai can come out of the ongoing trade wars a winner.

As one local business mogul put it: “Turmoil provides opportunity for the region… we’re smaller… and we’re on the sidelines, while the rest of the world fights it off,” Group CEO of Gargash Group Shehab Gargash said at a panel.

The fundamentals are strong, and so is the momentum: The UAE’s “openness to trade and capital and people” and the structural changes it has made in the past five years provides it with strong buffers against external shocks, Simon Williams, HSBC’s chief economist for Central and Eastern Europe, the Middle East, and Africa, said at a separate panel. This means that rather than leading to negative knock-on effects, “weaker oil prices and trade changes are a backdrop that will highlight Dubai’s strengths,” Williams added.

The UAE is also doing a good job maintaining relationships with both the US and China, which will be an advantage for its own position as a trade hub, and both Williams and Dean of London Business School and economist Sergei Guriev see it continuing to tow the line.

It’s also emerging as a safe haven while traditional safe haven assets — like the USD — are facing volatility. The Dubai Financial Market was among the top performing large global markets since Liberation Day, said Aloke Gupte, managing director and co-head of International equity capital markets at JP Morgan, at one of the panels. The DFM General Index saw the highest monthly gain in the GCC with a 4.1% uptick, ending the quarter up 2.9% up YTD, while the ADX recorded a 1.8% uptick.

Appetite for IPOs is also already returning after a quiet 1Q that saw no listings in Dubai and only one in Abu Dhabi. Dubai Holding is taking a 12.5% stake in its Dubai Residential REIT to market this month.

And analysts see IPO momentum from last year — which saw Dubai play host to the world’s biggest tech IPO of the year, courtesy of Talabat — continuing this year, with HSBC’s global head of equity capital markets, Edward Sankey, saying he expects to see more IPOs out of the region this year than last year, despite most global IPOs likely being pushed to the back end of the year. This is also despite global activity already slowing since the start of the year, and expectations for other markets tempering from earlier projections.

More capital inflows are expected: “The UAE is still relatively under-reflected among global investors,” Gupte said. “Over the next five years, more investments will come in,” he noted, adding that the momentum the market has seen since last month “has some legs and is likely to stay for a while.”

Does this mean the region is insulated against all external shocks? Not necessarily. While most of the speakers at the summit yesterday cited volatility in oil prices and the USD as potential risks on the region, the overwhelming consensus is — with the caveat being that the region itself is not homogenous, with some being more resilient than others: Strong fundamentals and diversification away from oil, as well as the region’s relative neutrality amid geopolitical and trade tensions, will allow it to sustain its well-earned title as a magnet for global wealth, even — or especially — as trade wars and global headwinds continue.

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