UAE equities are well placed to sustain their momentum heading into 2H 2025, with stock valuations in sectors such as real estate, banking, and consumer names still offering upside relative to earnings growth, Marwan Haddad, managing director of Azimut Group told CNBC in an interview (watch: runtime: 4:52). With Dubai coming out as the top performer in the region — and one of the best in the world — in 1H 2025, strong earnings growth and a macro environment benefiting from “decades of investments” in infrastructure and reforms and regulations are expected to continue to buoy performance throughout the year, despite global headwinds like tariffs and oil price volatility.

Valuations remain attractive: With banks, real estate, and consumer-facing companies all delivering strong operational performance, Haddad believes investors will continue to find value, even as global macro risks linger. Many listed firms in the UAE are seeing their earnings grow faster than their share prices, thus keeping valuations in check, Haddad said. “Most of the time you see valuations run ahead and then earnings catch up,” Haddad said. “But over the last two years [in the UAE] it’s been very unique, earnings have really been running ahead of multiple expansions,” he noted, adding that some stocks are still trading at steep discounts (40%) to their benchmarks while offering yields of around 6.5%.

A strong real estate sector is a major contributor: Property developers in particular — despite fears of the sector overheating — are continuing to post record earnings, Haddad said, citing DFM-listed Emaar’s record quarterly sales backlog as evidence of underlying demand.

REMEMBER- Saudi Arabia’s oil-heavy Tadawul has underperformed regional peers this year, with investors taking a more selective approach as project momentum slows and oil hovers around USD 70/bbl. In contrast, Dubai’s benchmark climbed 7.9% in July, extending YTD gains to 19.4% — the strongest performance in the GCC — on the back of double-digit growth in heavyweight banking and real estate stocks. Meanwhile, Tadawul’s benchmark index TASI moved in the opposite direction, slipping 2.2% in July to widen its YTD loss to more than 9%.

The region as a whole is expected to remain resilient to external shocks: Despite lackluster performance for some regional indices earlier this year, local dynamics — think earnings growth, sector performance, domestic liquidity, and government spending plans — are likely to be the main forces shaping market performance through year-end, Haddad noted. Still, investors may remain more cautious about Saudi Arabia until oil prices or project pipelines show stronger momentum.

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