THIS MORNING: PMI posts worst June reading in five years + Adnoc eyes financial advice across the pond

Good morning, friends. The UAE keeps topping the “safest market in MENA” league tables, despite the odds.

BMI ranks the country first in the region for infrastructure risk/reward, and yet construction is bracing for a 6.8% contraction in 2026 — a sharp reversal from last year's growth as the war forces a near-term reset. Two things are true at once — still the best house on the block, and still getting hit by the weather affecting everyone else.

Also, on the macro front: The non-oil sector is teetering close to the contraction threshold at 50.8, the weakest June reading in five years. The good news, if you're squinting for it: Hormuz bottlenecks are easing, and that shows up in supplier delivery times.

Meanwhile, someone was very busy trying to get into the financial sector’s systems this week. The Cyber Security Council says it swatted away malware and phishing attempts targeting financial services and digital infrastructure, and insists nothing actually broke. Abu Dhabi Commercial Bank’s services were still down as of yesterday, though, according to several customers we spoke to, even though it’s not clear if the outage is related. The bank had blamed “essential service maintenance” earlier.

PLUS- Yet more cheques from BlueFive Capital. We have the latest investment from the GCC investment manager, this time in China’s AI sector.

Adnoc eyes financial advice across the pond

State oil giant Adnoc is reportedly reviewing a list of lenders in the US to bring on board for financial advice services, Bloomberg reports, citing people familiar with the matter. The energy player is looking at pitches from 10 investment banks for a work scope ranging from strategic advice to transactions.

IN CONTEXT- Adnoc has made its ambitions in the US clear, having planned to increase its US investments to USD 440 bn over the next decade. Its international investment arm XRG is lining up tens of bns of USD for a gas push in the US and recently wrapped up its stake increase in the Rio Grande LNG facility.

Jumping the queue for jets

Saudia and Etihad eye early delivery slots amid Air India uncertainty: National carrier Etihad Airways and Saudi Arabia’s Saudia are reportedly in preliminary talks with Boeing and Airbus to secure delivery positions as early as 2029 and 2030, Bloomberg reports, citing unnamed sources. The two airlines are looking to capitalize on slots that could open up if Air India pulls back on its order commitments.

What’s going on with Air India? Air India Group posted a c. USD 2 bn loss for FY 2025/26, compounded by surging fuel costs, Pakistan’s airspace ban — which has added distance and cost — and broader disruptions from the regional conflict, Reuters reported.

Why the slots matter: For airlines, jumping the delivery queue is rare. A near-term slot means newer, more fuel-efficient aircraft in service sooner as Gulf carriers work towards modernizing their fleets and boosting passenger capacity as they expand their international networks.

Business jet departures slump

Business jet departures across the Middle East fell roughly 30% in the four months after the Iran war began — and the UAE, which built up one of the region's busiest private aviation markets on the back of its Golden Visa push, is now watching that growth reverse, Bloomberg reports. Takeoffs between 28 February and 28 June fell to 15k, down from 21.5k in the same period a year earlier, according to aviation data from Wingx Advance GmbH picked up by the business information service — driven by missile strikes on UAE, Saudi, and Kuwaiti sites, airspace closures, and capacity cuts at Emirates, Etihad, and Qatar Airways.

The outlook is shaky: “The return of business aviation activity will be directly linked to the return of [the ultra-wealthy residents the UAE has courted], and that remains unclear at the moment,” Alton Aviation's Adam Cowburn told Bloomberg. Bombardier and General Dynamics have both flagged softer regional orders, even as global private jet sales climb on strong US demand.

Data point

The UAE’s non-oil economy is still expanding — but only just. The S&P Global UAE PMI fell to 50.8 in June from 52.6 in May, marking the weakest June reading in more than five years and leaving the index only slightly above the 50-point line separating growth from contraction, the ratings firm said in a note (pdf).

The regional conflict appears to be biting into the real economy. Firms reported softer client activity, delayed spending decisions, weaker tourism demand, and higher transport and commodity costs. Employment contracted at the sharpest pace since August 2020, while operating conditions were the weakest since February 2021.

There were still pockets of resilience: Domestic spending, public investment, construction, and digital services helped keep activity above water, while easing Strait of Hormuz bottlenecks helped supplier delivery times improve at the fastest pace in four months.

Looking ahead, the de-escalation in regional tensions should help firms see a recovery in demand, and continued shorter delivery times as more movement through the Strait of Hormuz rolls back the disruption to supply chains, S&P senior economist David Owen said. Staff cuts and continued caution from clients could mean a longer, gradual road to recovery rather than a sharp rebound, he added.

PSAs

Etihad Rail is extending its passenger network to Ajman, with a new station in Hamriyah, Arabian Business reports. The operator said it has tendered a contract for the plan, with the contracts due at the end of the month.

Background: The long-awaited service kicked off at the end of last month as part of a phased rollout that started with a service between Abu Dhabi and Fujairah. Additional stations are set to open in Dubai, Al Dhafra, and Al Dhaid Train Station in Sharjah this year, with Sharjah Train Station slated to open next year.

UAE residents can now pay for government services in installments through Tabby, the Federal Authority for Identity, Citizenship, Customs and Port Security said in a post on X.

The details: The options cover services including visas, residency permits, and identification cards, with transactions of up to AED 20k that can be repaid over three to 12 months, subject to credit approval.

WEATHER- Temperatures reach 42°C in Abu Dhabi today and 41°C in Dubai, with both emirates seeing a low of 31°C, according to our favorite weather app.

The big story abroad

Nato’s two-day summit kicks off tomorrow in Ankara and discussions are expected to revolve around the ongoing Russia-Ukraine conflict, the US-Iran war, and US President Donald Trump’s comments on Greenland. Trump demanded “loyalty” from the coalition ahead of the summit, where he is scheduled to meet with the heads of state of Turkey, Syria, and Ukraine.

The spread of AI use in financial services has triggered an “arms race” for regulators, according to Sheldon Mills, executive director of the UK’s Financial Conduct Authority. Mills argues that regulators need greater powers to monitor the rapid growth of AI, namely large language models, and underlined concerns over the softwares’ bias, opaque pricing, and personalized manipulation.

Meanwhile, in aviation: British low-cost airline EasyJet has agreed in principle to the fifth takeover bid proposed by global alternative investment firm Castlelake LP, valuing the company at USD 6.9 bn. The budget carrier has been struggling with rising jet fuel prices and muted demand since the regional war broke out.

Trump finagles Balogun favor from FIFA? FIFA will allow the US top goal scorer Folarin Balogun to play in the upcoming showdown with Belgium — despite the footballer earning a red card in his last match — after Trump urged FIFA President Gianni Infantino to review the suspension. This move marks the first reversal of its kind since 1962 and has drawn criticism from many, including the Belgian federation.

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