Abu Dhabi equities gained ground as Dubai lagged behind in July; debt markets are likely to remain slow, analysts say

July was another rough month for both Gulf equities and primary debt markets, but it wasn’t all bad. Abu Dhabi is emerging as a bright spot, being the only major GCC equity market to post a meaningful monthly gain last month, closing up 1.1%. Meanwhile, issuers in the UAE still managed to raise some capital before rising US Treasury yields and Fed rate-hike chatter shut the window for almost everyone else.

Zoom out to the rest of the Gulf: Qatar’s QE20 and Bahrain’s bourse are both down YTD, and only Oman’s MSX 30 and Saudi’s TASI are ahead of where Dubai sits for the year.

Dubai’s DFM General Index fell 2.7%, according to a Kamco Invest report (pdf), with five out of the eight sectors registering declines during the month. Talabat led with a share price decline of 14.6%, following news of Uber’s takeover of Delivery Hero, its German parent.

Abu Dhabi’s advance was carried by large-cap financials (+2.2% on the month) and telecoms (+5.7%), while technology and real estate fared slightly poorer. Dubai’s pullback, by contrast, was concentrated in real estate and consumer discretionary names that had rallied hardest earlier in the year. Valecha reads the index move as gain-realization and a valuation reset — Dubai now trades at 9.8x forward earnings, 14.6% below its February peak — rather than a deterioration in fundamentals.

Despite the mixed performance, sentiment is “constructive,” analysts say. “[Sentiment] was supported by confidence in the domestic economy and anticipation of the upcoming earnings season,” Century Financial’s Chief Investment Officer Vijay Valecha wrote in an emailed note.

But investors are becoming more selective, Valecha says. “[Investors are] favoring fundamentally strong companies while [realizing gains] in stocks that had rallied sharply in recent weeks,” he adds.

Looking ahead: Mashreq Capital’s 3Q 2026 outlook (pdf) keeps the UAE at a neutral equity weighting overall but also splits the market in two. It favors Abu Dhabi financials, pointing to the Adnoc value chain and stronger bank balance sheets, while flagging caution on Dubai-facing exposure tied to a real estate cycle it expects to cool as capital inflows and population growth normalize.

The valuation gap makes the case too: The UAE is the cheapest market in MENA on equity risk premium (6.55%, against a 2.77% regional average) despite trailing earnings-per-share growth of 7.3% — a mismatch Mashreq puts down to earnings-slowdown concerns rather than weak fundamentals.

As for debt…

GCC-wide primary issuance fell to USD 10.15 bn in July from USD 12.1 bn in June — and would have dropped under USD 5 bn without Kuwait’s sovereign. The latter returned mid-month with a triple-tranche issuance that drew USD 18 bn of demand and alone accounted for 60% of the month’s regional volume, according to data shared by Bank Nizwa’s Muhammad Ahsan.

Inside that freeze, two UAE banks still priced: Commercial Bank of Dubai’s USD 600 mn AT1 perpetual at 6.625%, and Ajman Bank’s debut USD 300 mn AT1 perpetual sukuk at 6.5% — both getting out in the first half of the month.

Ahsan doesn’t expect a quick rebound. He sees August staying quiet as the region hits peak summer and issuers wait out the lull. Meanwhile, Mashreq has kept its USD 135 bn estimate for 2026 MENA hard-currency issuance intact — with USD 85 bn already priced in 1H 2026 — but warns that any re-escalation in regional tensions would widen new-issue premia and raise execution risk on whatever's left of the pipeline.

MENA spreads have already tightened to 122 bps from a war-time peak of 175 — tighter even than the 135 bps they sat at before the conflict, which Mashreq says caps how much further they can compress in the second half.