Moody’s forecasts 7% contraction for the UAE economy this year

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WHAT WE’RE TRACKING TODAY

THIS MORNING: Egypt snubs AD Ports bid for ALCN + Al Habtoor puts IPO plans on hold

Good morning, everyone. We left you on a somewhat hopeful note on Friday as US President Donald Trump — for the nth time — dangled the idea of a potential agreement on the horizon, and just one long weekend later, an interim agreement has been reached.

The agreement is not without its caveats: It’s only a “memorandum of understanding” at this point, and the agreement is not to permanently end the war but rather to extend the 60-day ceasefire one more time. Without any clarity on where negotiations have landed on Iran’s nuclear program, the unfreezing of Iranian assets by the US, or whether Israel has green-lit the agreement, there’s still a lot of uncertainty around what’s going to happen next.

All eyes are on Friday for the official signing of the agreement — and for the reopening of the Strait of Hormuz after months of disruption, according to Trump, who proclaimed on Truth Social: “Ships of the World, start your engines. Let the oil flow!”

While the international pages are full of the welcome news of a diplomatic breakthrough between the US and Iran, on the home front, the fallout from the war is bringing us some less-than-positive news.

Moody’s is penciling in a contraction for the UAE economy this year just as the World Bank is downgrading its forecast. Plus: Our IPO pipeline seems to only be shrinking, with Al Habtoor Group the latest to shelve IPO plans.

On the M&A front, L’imad is looking to close in on full control of Taqa, and Egypt is set to reject AD Ports’ offer to acquire 90% of Alexandria Container and Cargo Handling.

SPEAKING OF THE US-IRAN WAR- The UAE dismissed reports that it transferred bns of USD to Iran, saying claims that funds, including a reported USD 3 bn tranche, were released or facilitated through the country are “entirely false and unfounded,” Wam reports. The Foreign Affairs Ministry said no frozen Iranian funds had been released, transferred, or facilitated through the UAE.

IN CONTEXT- A recent Reuters report, citing unnamed sources, claimed the UAE had agreed to transfer between USD 10 bn and USD 20 bn to Iran, without specifying whether the funds were frozen Iranian funds or came from state coffers. One of the sources said the arrangement was linked to a halt in Iranian missile and drone attacks on the UAE and more economic cooperation. Releasing Iranian assets frozen under US sanctions was reported elsewhere by Reuters to be under discussion as part of an agreement between Washington and Tehran.

Reuters also cited a UAE official as saying the country’s foreign policy is focused on de-escalation and reducing tensions across the region while supporting efforts to protect the region from the consequences of conflict.

WEATHER- It’s boiling hot in Abu Dhabi, with a high of 43°C and a low of 29°C, while temperatures are cooling down in Dubai, with a high of 37°C and a low of 27°C.

Al Habtoor puts IPO plans on hold

Al Habtoor Group has shelved plans to list part of its business on the Dubai Financial Market (DFM) for now, with founder and chairman Khalaf Al Habtoor telling CNBC Arabia the company is focused on its expansion pipeline.

BACKGROUND- Public market ambitions have been part of the group’s plans. A year ago, Al Habtoor said the group was preparing an IPO of its hospitality arm, Habtoor Hospitality, on the DFM. The proposed listing would have included a portfolio of hotels in Dubai, alongside international properties in Budapest, London, Vienna, and the US.

Al Habtoor said any future listing would likely involve between 5% and 15% of the group. He noted that the group already operates under governance and management structures similar to those of a listed company.

It’s not the only one to have delayed IPO plans, and not the only one in the hospitality sector either, as the war has kept dealmaking muted in the region. The Financial Times recently reported that preparations paused on Dubai Holding’s plans to list its retail assets. The sources cited the war-induced hit to the tourism industry as behind the pushback. Al Habtoor said occupancy at the firm’s hotel currently ranges between 35-40%. Emirates Global Aluminium’s (EGA) much-anticipated IPO has also been pushed back to at least next year.

Expansion plans are on track: The group is studying acquisition windows in central Europe, where it’s already active in Austria, Hungary, and Slovenia. As for Syria, the group isn’t currently planning on getting involved in investment projects there, after a delegation traveled to the country last summer to discuss cooperation with the government and potential investments. It also scrapped its plans in Lebanon and recently launched a lawsuit against authorities for “severe and sustained harm” to its assets.

Egypt snubs AD Ports bid

EXCLUSIVE- Egypt’s Transport Ministry is set to reject AD Ports’ mandatory tender offer to acquire up to 90% of Alexandria Container and Cargo Handling (ALCN), a senior government official tells EnterpriseAM.

REFRESHER- The Emirati port operator — bidding through its subsidiary Black Caspian Logistics — offered EGP 27.47 per share last week to consolidate its control over the Egyptian maritime operator through a mandatory tender offer as part of a necessary regulatory step, sweetening its bid by 19.5% from an initial EGP 22.99 per share offer submitted late last year. The newly submitted offer will be presented at an upcoming ALCN board meeting, pending the receipt of an official decision from Egypt’s state-owned Holding Company for Maritime and Land Transport, the official says.

The state is holding the line: The Abu Dhabi wealth fund ADQ-owned AD Ports has been looking to consolidate the 51.33% indirect majority it has built in the company since 2022. But the government — which controls a combined 42.9% blocking stake of ALCN through the Holding Company for Maritime and Land Transport (35.3%) and the Alexandria Port Authority (7.6%) — is refusing to hand over the keys of its lucrative Mediterranean gateway asset.

AED 55 bn incoming for Al Maktoum

The UAE is pushing ahead with its expansion of Al Maktoum International Airport, setting aside more than AED 55 bn in contracts tied to the project to be awarded by the end of the year, Dubai Crown Prince Hamdan bin Mohammed bin Rashid Al Maktoum said on X. The first phase of commercial operations is slated for 2032.

REFRESHER- The government is investing AED 128 bn in expanding the airport, aiming to lift annual passenger capacity to 260 mn and targeting 12 mn tons of air cargo. Other aviation players have also been striking a note of confidence in the sector, with Emirates offering up ins. for travelers last week as part of its planned incentives to bring back hesitant passengers after the war triggered a drop in passenger traffic through the UAE.

France’s new wingman?

France could be looking to the UAE for help with the next iteration of its Rafale fighter jet. The Financial Times cites French Defense Minister Catherine Vautrin as saying Paris is in talks with the UAE on a potential partnership around the next-generation Rafale F5, following the collapse of a joint fighter jet program with Germany.

What’s on the table? Details remain scarce, but the UAE could potentially contribute funding and future orders for the aircraft in exchange for work for local contractors. The UAE already operates Rafale jets, and Vautrin described the country as a potential “big client” for the upgraded model.

IN CONTEXT- Defense ties between the UAE and France have been growing. UAE defense conglomerate Edge recently established its European headquarters in Paris as part of a broader push across the continent. At the same time, the UAE is pushing to localize more of its defense stack, recently acquiring a controlling stake in Italy’s CMD to strengthen its foothold in the defense supply chain.

AND- Edge is continuing to deepen its French ties: The firm signed a strategic cooperation agreement with French aerospace and defense group Safran, according to a statement, expanding collaboration after the two agreed earlier this year to co-develop advanced long-range air-to-ground weapon systems. The new agreement broadens cooperation across a wider range of aerospace and defense technologies, including unmanned systems and electronic warfare.

Happening today

The UAE has a seat at the G7 table this week, with President Mohamed bin Zayed Al Nahyan participating in the G7 Summit in France, Wam reports. The summit kicked off yesterday and runs through tomorrow as leaders grapple with an increasingly crowded agenda spanning geopolitical tensions in the Middle East, trade, security, and the global economy. We have more on what went down during day one of the summit in the news well, below.

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The big story abroad

When will Hormuz reopen? That was the main question dominating the opening day of the G7 Summit in France. While US President Donald Trump seems confident that the strait will be open to all on Friday — when the US and Iran are scheduled to sign a final agreement — others are less optimistic.

Drama at the summit: G7 members are yet to find common ground on how to handle “the situation in Iran,” one G7 official told Bloomberg. With two more days to go, we’ll be closely watching for developments from the summit.

News of the US-Iran agreement is making waves across stock markets: Equities soared yesterday as the announcement reignited investor confidence — the S&P 500 jumped 1.7% and the Nasdaq Composite rose 3.1%. The rally was further supported by SpaceX’s shares rising almost 20% yesterday — their second day of trading. Meanwhile, oil prices continued their fall, with Brent dipping 4.8% to USD 83.17.

Beware the meat wall: The Wall Street Journal is out with a piece looking at a new obstacle standing in the way of the teams playing in this year’s World Cup — the Meat Wall. In this tactic players line up to form a wall in hopes of blocking corner or free-kicks, which the WSJ says has turned “the beautiful game into a wrestling match.”

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Market watch

The UAE and Oman are redirecting a large wave of crude to Europe next month as Chinese imports of Gulf oil fall sharply, with at least six supertankers carrying a combined 12 mn barrels already scheduled, Bloomberg reports.

The China gap is stark: China normally takes 70-80% of Oman’s crude, but its purchases of May-loading Oman cargoes fell to just 65k bbl / d, down from some 700k bbl / d in February. It also bought no May-loading UAE crude, compared with 750k bbl / d in February, leaving more Murban, Upper Zakum, and Oman crude available for European refiners.

What’s driving the shift? Europe becoming a bigger buyer of Gulf crude is softening the blow of China’s retreat for Gulf producers, and it’s been helped by a rare trading arbitrage that opened up as China retreated. The premium of Brent futures to Dubai crude swaps (the EFS, or exchange of futures for swaps) widened to nearly USD 10 / bbl last week from USD 6.75 on 29 May, according to PVM Oil Associates — making Dubai-linked grades like Murban, Upper Zakum, and Oman crude suddenly attractive to European refiners who rarely see them in volume.

Why it matters: Europe’s ramped-up buying puts a floor under Gulf producers’ revenues even as their most important customer pulls back, and it’s a sign that the market is finding its own equilibrium — redirecting barrels west rather than leaving them stranded.

Meanwhile, Adnoc has more to offer

Adnoc has launched its third crude tender this month — offering up to 2 mn bbl of Upper Zakum, Umm Lulu, and Das crude, Reuters reports, citing trade sources. Buyers can purchase on an FOB basis from Fujairah, Zirku, or Das Island, or via ship-to-ship transfers across ranges including Fujairah to Sohar and Malaysia, with pricing set against official selling prices or the Dubai benchmark.

Adnoc is finding ways to keep exports moving — even as Hormuz’s reopening timeline remains unclear. The company has exported three LNG shipments from the Gulf on tankers that went dark while crossing Hormuz earlier this month. It also offered oil tenders this month, resumed exporting naphtha through Oman’s Sohar port, and is planning a multi-fuel pipeline to hedge against future shipping disruptions.

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Could we be looking at a 7% contraction this year?

Moody’s is keeping the faith in the UAE, even as forecasters slash their growth outlooks. The ratings agency affirmed the country’s Aa2 sovereign credit rating with a stable outlook despite ongoing disruption to trade through the Strait of Hormuz, Arab News reports.

Growth, however, is another story: Moody’s expects the UAE economy to contract by around 7% in 2026, driven by a 23% decline in hydrocarbon production and a 4% contraction in the non-oil economy. The agency flagged “disruption to trade and confidence-sensitive sectors” as being behind the drop.

Moody’s is the most bearish forecaster yet: Goldman Sachs had also expected a contraction earlier this year, saying it sees 2026 GDP shrinking 5%, while Oxford Economics sees GDP contracting by 0.2%. Others are slightly more optimistic, with the World Bank expecting in its latest report (pdf) growth of 2.4% in 2026, still down sharply from its January forecast of 5% and from the 6.2% growth recorded last year — one of the sharpest forecast downgrades issued by the lender globally. The World Bank also clipped its growth prediction for 2027 to 4.1%, down from 5.1% in January.

Moody’s does see the UAE recovering fast: Moody’s expects the economy to rebound by around 13% in 2027.

Why aren’t ratings agencies worried? Fitch also reaffirmed its AA sovereign rating for Abu Dhabi in May, and the answer for both lies in Abu Dhabi’s balance sheet. Moody’s assumes the emirate would step in if needed, noting that Abu Dhabi’s government financial assets exceeded 300% of GDP at the end of 2025. The UAE also entered 2026 with a AED 17.4 bn federal budget surplus, while federal debt is expected to remain around 3-4% of GDP.

REMEMBER- The UAE still has some insulation from the disruption: The Habshan-Fujairah pipeline allows Abu Dhabi to bypass the Strait of Hormuz for part of its oil exports, while higher oil prices — which Moody’s expects to average USD 90-110 per barrel this year — should partially offset lower export volumes. The country is also looking to expand alternative export routes through plans to boost pipeline capacity and build a separate multi-fuel Hormuz bypass pipeline for refined products.

Still, the pain is expected to spread well beyond the oil sector. Moody’s flagged tourism, logistics, transport, real estate, and foreign investment as sectors likely to come under pressure as weaker confidence and disrupted connectivity weigh on activity.

It’s not just a UAE problem: The World Bank cut its global growth forecast for 2026 to 2.5% and slashed its outlook for the Middle East, North Africa, Afghanistan, and Pakistan region to 1.6%, down from 4% growth last year. The lender warned global growth could slow to as little as 1.3% if energy disruptions spill into financial markets.

Taqa’s minority shareholders are getting bought out

Taqa’s days on the public market may be numbered. Abu Dhabi Power Corporation (ADPower) launched a mandatory acquisition process to buy out the remaining minority shareholders in the Abu Dhabi National Energy Company (Taqa), a move that would hand its parent, L’imad Holding, full ownership of the utility giant, according to a press release (pdf).

REMEMBER- L’imad-owned ADPower lifted its stake in Taqa to 98.12% just last week, clearing the threshold required to trigger a squeeze-out under UAE regulations.

ADPower currently owns more than 110.3 bn shares in the company and is seeking to acquire the remaining 1.88% at AED 2.70 apiece, up from its last share price of AED 2.33.

With no remaining freefloat, a formal delisting would be the logical conclusion. While no delisting plans have been specified yet, removing the remaining minority shareholders would leave little practical reason for Taqa to remain publicly traded. “Once the mandatory acquisition is completed [...] the rationale for maintaining a public listing becomes significantly reduced, making a future delisting a logical outcome,” Milan Azar, market analyst at XTB MENA, told Al Etihad.

Kudo.com and Redpin push ahead with UAE plans

Kudo.com lands UAE license

Kudo.com is pushing further into the Gulf. The trading platform has secured a Capital Markets Authority license to carry out promotion and introduction activities in the UAE as it expands its regional presence, according to a press release.

At the same time, Kudo is rolling out access to a range of GCC-listed stocks, allowing users to trade in companies across the UAE, Saudi Arabia, Qatar, and Kuwait through its platform, with Emaar, Adnoc Gas, Saudi Aramco, and Qatar National Bank among the options listed.

Blackstone-backed Redpin secures DFSA approval

Redpin targets property payments in UAE: Blackstone-backed fintech Redpin secured in-principle approval from the Dubai Financial Services Authority to process property payments in the Emirates, The Paypers reports. The firm intends to offer property payment solutions for developers and customers and aims to roll out its Redpin Platform as an alternative payment solution with lower FX costs than manual processes.

Back to the future

Investors are dusting off their pre-war playbook after the US and Iran reached an interim agreement that should lead to the reopening of the Strait of Hormuz. Hedge funds are piling back into trades that worked before the conflict, buying everything from short-dated Treasuries and beaten-down Asian currencies to Southeast Asian equities and US consumer stocks, Bloomberg reports. One fund manager said the trade is to go “back to the future” with what worked before the war.

The biggest beneficiaries could be Asian: Hedge funds are turning bullish on oil-importing economies, including Japan, South Korea, and India, wagering lower crude prices will ease import bills and inflation pressures. Even instant-noodle stocks are back on investors’ shopping lists because of their exposure to palm oil prices.

Other sectors stand to gain as well: Investors are also eyeing Middle East-exposed industrials, logistics firms, and shipping companies that could benefit from a normalization of traffic through Hormuz.

Why the optimism? The agreement removes a major overhang for global markets after months of fighting triggered a massive disruption to oil supply. Brent crude fell more than 5% toward USD 82 a barrel after the agreement announcement, Bloomberg reported separately, while Treasury yields and the USD also moved lower as traders pared back expectations for future rate hikes.

A lot still hinges on inflation: “The real test now is the inflationary legacy of this war,” KCM Trade’s Tim Waterer said, while several analysts expect the agreement to trigger a short-term rally rather than a long-term one. “The big question is how quickly this oil relief translates into lower inflation and whether that opens the door for central banks to take an easier stance on monetary policy,” Waterer added.

Not everyone is convinced: The agreement still leaves major questions unresolved, including sanctions relief, Iran’s nuclear program, and the future operation of the Strait of Hormuz. While US President Donald Trump says the waterway will reopen on Friday, analysts warn traffic could take weeks to normalize and inflation expectations “won't reverse overnight,” Aberdeen Investments’ Michael Langham said.

In other words, markets may be pricing the best-case scenario. Pepperstone strategist Dilin Wu said the agreement must still survive Israeli opposition, Iranian hardliners, and a 60-day nuclear negotiation process. Stifel’s Barry Bannister also warned that while oil may fall further in the short term, the lack of detail in the agreement means the geopolitical risk premium is unlikely to disappear anytime soon.

MARKETS THIS MORNING-

Asia-Pacific markets are mixed in early trading this morning, following yesterday’s rally triggered by the announcement of a framework agreement between the US and Iran. Investors are now sitting tight awaiting a rate decision from the Bank of Japan, which is expected to raise rates to a multi-decade high when it meets later today. Japan’s Nikkei is flat, while South Korea’s Kospi is up 1.4%.

ADX	9,805	+2.7% (YTD: -1.9%)
DFM	5,954	+3.8% (YTD: -1.5%)
Nasdaq Dubai UAE20	4,659	+5.8% (YTD: -4.7%)
USD : AED CBUAE	Buy 3.67	Sell 3.67
EIBOR	3.4% o/n	4.0% 1 yr
TASI	11,096	-0.1% (YTD: +5.8%)
EGX30	52,307	+0.6% (YTD: +25.1%)
S&P 500	7,554	+1.7% (YTD: +10.4%)
FTSE 100	10,431	-0.4% (YTD: +5.0%)
Euro Stoxx 50	6,229	+0.7% (YTD: +7.5%)
Brent crude	USD 81.14	+0.4%
Natural gas (Nymex)	USD 3.15	+0.2%
Gold	USD 4,338	-0.3%
BTC	USD 66,404	+1.4% (YTD: -24.2%)
Chimera JP Morgan UAE Bond UCITS ETF	AED 3.70	+0.3% (YTD: -1.3%)
S&P MENA bond & sukuk	152.49	+0.3% (YTD: +0.4%)
VIX (Volatility Index)	16.20	-8.4% (YTD: +8.4%)

THE CLOSING BELL-

The DFM rose 3.8% on Friday on turnover of AED 1.4 bn. The index is down 1.5% YTD.

In the green: Sukoon Ins. (+10.6%), Emaar Properties (+8.3%), and Emirates NBD (+8.0%).

In the red: Al Mazaya Holding Company (-4.9%), Spinneys 1961 Holding (-2.5%), and Agility The Public Warehousing Company (-2.1%).

Over on the ADX, the index rose 2.7% on turnover of AED 2.3 bn. Meanwhile, Nasdaq Dubai was up 5.8%.

CALENDAR

JUNE

15 June-15 September (Monday-Thursday): Dubai Mallathon, Dubai.

17 June (Wednesday): Investopia Global Talks, Tashkent, Uzbekistan.

22-24 June (Monday-Wednesday): The International Glass Manufacturing Show, Dubai.

SEPTEMBER

1-3 September (Tuesday-Thursday: Middle East Energy, Dubai World Trade Center, Dubai.

7-9 September (Monday-Wednesday): AIM Congress, Dubai World Trade Center.

7-9 September (Monday-Wednesday): International Property Show, Dubai World Trade Center, Dubai.

12-13 September (Saturday-Sunday): Emirates International Congress on AI & Visionary Leadership in Transforming Healthcare, Adnec Center Abu Dhabi.

14-17 September (Monday-Thursday): Arabian Travel Market, Dubai World Trade Center, Dubai.

29-30 September (Tuesday-Wednesday): AFCM Annual Conference, Abu Dhabi.

OCTOBER

4-10 October (Sunday-Saturday): World Space Week, Abu Dhabi.

5-7 October (Monday-Wednesday): AI Everything Global, Adnec Center, Abu Dhabi.

12-14 October (Monday-Wednesday: Airport Show, Dubai World Trade Center, Dubai.

20-22 October (Tuesday-Thursday): Future Health Summit, Adnec Center Abu Dhabi.

27-28 October (Tuesday-Wednesday): Arab Competition Forum, Dubai.

30 October (Friday): Large businesses achieving annual revenues equal to or above AED 50 mn must appoint an accredited service provider for e-invoicing implementation.

Signposted to happen sometime in October 2026:

Abu Dhabi Space Week, Abu Dhabi.

NOVEMBER

2-6 November (Monday-Friday): Dubai Future Finance Week, Dubai.

4 November (Wednesday): Digital Transformation Summit, Sofitel, Abu Dhabi.

9-10 November (Monday-Tuesday): Annual government meetings, Abu Dhabi.

9-12 November (Monday-Thursday): EMEA Council on Hotel, Restaurant and Institutional Education Conference, Dubai College of Tourism, Dubai.

10-12 November (Tuesday-Thursday): Dubai International Electric Vehicle Exhibition & Conference, Dubai World Trade Center.

16-18 November (Monday-Wednesday): World Police Summit, Dubai World Trade Center, Dubai.

DECEMBER

2-4 December (Wednesday-Friday): UN Water Conference, UAE.

4-6 December (Friday-Sunday): Formula 1 Abu Dhabi Grand Prix, Abu Dhabi.

8-9 December (Tuesday-Wednesday): Capital Market Summit, Madinat Jumeirah, Dubai.

Signposted to happen sometime in 2027:

1 January: Deadline for large businesses to implement e-invoicing;
1Q 2027: Completion of the first phase of Hassyan seawater desalination project;
1-3 February (Monday-Wednesday): World Governments Summit;
31 March: Small businesses with annual revenues of less than AED 50 mn are obliged to contract with an accredited service provider for e-invoicing implementation;
31 March: Government entities are required to appoint an accredited service provider for e-invoicing implementation;
21-22 April (Wednesday-Thursday): Token2049, Dubai;
1 July: Deadline for small businesses to implement e-invoicing;
1 October: Deadline for governments to implement e-invoicing;
Abu Dhabi’s solar and battery energy facility, combining 5.2 GW of solar capacity and 19 GWh of battery storage, is set for commissioning.

Signposted to happen sometime in 2028:

Artificial Intelligence Summit.

Signposted to happen sometime in 2029:

Sibos 2029 organized by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), Dubai;
Annual Meetings of the World Bank Group and the International Monetary Fund, Abu Dhabi;
The commissioning of the seventh phase of Mohammed bin Rashid Al Maktoum Solar Park.

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