Dubai bourse falls into the hands of the bears: The DFM briefly slipped 3.2% in intraday trading yesterday, before closing at 5.3k points — roughly 22% below its February peak and briefly entering bear market territory, according to our math. It closed down 2.53%, extending its losses as the Iran war enters its third week and investors reprice the safe-haven premium.

It’s largely expected: “The decline appears to be less about panic selling and more about markets adjusting to higher short-term risk and slower activity in sectors that are central to Dubai’s economy,” Christy Achkar, financial market analyst at CFI Dubai, tells EnterpriseAM.

The war has hit sectors central to Dubai’s economy and the DFM’s composition. The sell-off follows US-Israeli strikes on Iran and Tehran’s subsequent attacks on Gulf cities. These developments have disrupted travel routes and the emirate’s vital tourism sector while dampening investor sentiment, which analysts have warned could leave a mark on the property sector. (Read: Our Real Estate section below detailing how the tarnishing of Dubai’s “safe haven” image is impacting the sector so far, and what things might look like later down the line.)

The index is heavily weighted toward most of those conflict-exposed sectors, namely real estate, banking, and transportation, Ackhar tells us. She explained that companies such as Emaar Properties, Emirates NBD, Dubai Islamic Bank, Air Arabia, and Aramex — all closely tied to tourism, travel, and overall economic activity — account for a large share of the DFM.

Weaker visitor flows and slower travel activity quickly feed into the broader market, Achkar said. Pressure on aviation and logistics firms spreads to banks through expectations for slower lending and economic activity, while real estate stocks react to shifts in investor confidence.

The proof is in the pudding: Real estate stocks led the declines on the DFM, with the sector falling 4.42%, followed by consumer staples (-2.82%) and financials (-2.80%). The real estate index has borne the brunt of the sell-off since the start of the war, shedding some 31% of its value during the period.

Why this is big

The pullback marks a sharp reversal for an exchange that had rallied roughly 300% over the past six years, driven by strong consumption, tourism growth, financial services expansion, and Dubai’s property boom. The index was also the third-best performing market in the GCC in 2025, up 17%, marking its fifth straight year of gains.

It’s also the worst hit so far in the region: The Abu Dhabi bourse fell 0.2% yesterday and is down around 9.5% since the war started, as sectors like energy help offset some of the losses elsewhere. Meanwhile, Tadawul has been rallying, and is now up more than 2% since the start of the war.

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