Sovereign wealth funds could scale back investments, shift them towards “resilience sectors” in light of war

1

WHAT WE’RE TRACKING TODAY

THIS MORNING: Attacks on energy infrastructure in the Gulf continue + Flights disrupted last night due to missile threat

Good morning, lovely people. What a week it’s been… we hope you’ve all stayed safe and as well as can be, all things considering.

Last night brought a bit of panic back for those of us in Dubai who had started going back to our normal lives, after receiving alerts in the evening to stay indoors due to missile threats — the first such alert in a few days. Reports of some loud interceptions being heard were shared across social media, while Abu Dhabi saw an incident of falling debris from an interception earlier in the day resulting in six injuries. Victims were identified as Pakistani and Nepali nationals.

Where things stand this morning

Azerbaijan’s Defense Ministry accused Iran of a drone attack that flew across its border and injured four civilians, and vowed to respond to Iran’s act of aggression, Reuters reports;
Iran’s armed forces denied responsibility for the attack and blamed Israel for the action, according to Iranian state media ;
Bahrain’s main oil refinery was targeted yesterday, resulting in a fire that was later contained;
The latest update from the Defense Ministry said it intercepted six ballistic missiles yesterday, with the final one falling into Emirati territory. It also detected 131 drones, six of which weren’t intercepted.

Plus: The UAE is now reportedly looking into potentially freezing Iranian assets held within its borders, a move that would mark a major retaliation and would significantly limit Tehran’s access to FX and global trade, the Wall Street Journal reports, citing people it says are in the know. Sources say officials have already warned Iran of this possible move, which they say could also trigger a major prolonged retaliation from Iran on Gulf states.

Assets that could be held would include capital flowing through currency exchanges and maritime firms, which are often said to operate oil tankers on behalf of Iran, the WSJ reports.

As the government mulls its response to Iran’s attacks, we look into how the UAE’s sovereign wealth funds might tweak their investment strategies during this time in this morning’s Big Story Today. Scaling back investments and repurposing them towards the government? Not out of the question, GlobalSWF says.

But for now, it’s business as usual — Abu Dhabi Investment Authority is backing Japanese digital payments platform PayPay’s IPO, and was among several investors divesting their stake from Medline to reap windfalls after its rally this year. 2PointZero Group is also on an acquisition spree in spite of everything, making its second high-profile acquisition this week.

(Not) getting out of Dodge?

While some flights managed to depart the country yesterday, others were forced to turn back, including a French repatriation flight, while others still were canceled for the time being, due to the missile threat. More than 1k flights were canceled, according to Flightradar24.

The UAE’s flag carriers have been operating limited flights for the past few days, opening up airspace gradually, with the goal of having 48 flights depart the country per hour through emergency corridors, Economy Minister Abdulla bin Touq Al Marri said earlier this week.

From the Dept. of Good News

Most analysts thin k supply disruptions will be short-lived and likely offset by global market oversupply. Fitch Ratings said that a Hormuz closure is likely to be “temporary” and cause a “limited” shock to oil prices.

Where things stand: Global inventories sat at 8.2 bn barrels at the end of 2025, enough to cover a pause in oil shipments via the Strait of Hormuz for over 400 days, Fitch data indicates.

Fitch remains steady on its 2026 forecast. The ratings agency does not expect its USD 63 per barrel Brent oil forecast for 2026 to see a significant increase. The agency is expecting supply to rise by 2.4 mn bbl / d and demand by 800k bbl / d.

Still, oil prices soared nearly 5% last night, with Brent crude reaching USD 85.4.

Vessels looking to transit the Strait of Hormuz could also secure ins. coverage, after ins. firm Gallagher’s Marine Divisional Director Angus Blayney said that the London ins. market is prepared to provide coverage, Bloomberg reports. Blayney flagged that the current near standstill in the strait comes down to shipowners choosing not to pass given recent attacks on ships, rather than holding off due to a lack of ins.

AND- The Central Bank of the UAE wants you to know the financial sector remains stable. Governor Khaled Mohamed Balama said in a statement (pdf) that the sector “continues to demonstrate the highest levels of resilience and stability.” Banks, financial institutions, and payment systems have remained unaffected by the ongoing developments and are operating normally, Balama said.

Liquidity and capital adequacy ratios are in good shape, with the liquidity coverage ratio sitting at 146.6% and the capital adequacy ratio at 17% — both comfortably above the minimums required by global supervisory bodies. Meanwhile, total assets in the banking sector have now crossed the AED 5.42 tn mark, according to the statement.

From the Dept. of Not-so-Good News

Markets closed in the red again yesterday, on their second day of trading following a two-day suspension. The DFM fell 1.3% while the ADX fell 2%, dragged down once again by financial and property heavyweights.

Despite that, Wall Street is warming up to Adnoc’s listed empire: US investment bank Cantor Fitzgerald initiated coverage of Adnoc’s six spun-off and publicly traded companies, assigning overweight ratings across the board and price targets implying roughly 30% upside on average, The National reports, citing a company statement.

The bank sees the UAE energy sector generating about USD 11 bn in cashflow by the end of the decade, supporting dividend yields of around 5-6%, despite the near-term volatility.

ICYMI- Cantor is leaning bullish on UAE equities despite the current volatility. In a note to clients, analyst Kato Mukuru urged investors to buy the dip in the banking sector, assigning overweight ratings to seven Emirati lenders and describing them as “low-risk, high-return” plays.

Market watch

Will the UAE and Kuwait be the next to wind down oil exports? After Qatar’s state energy giant QatarEnergy halted LNG production and Iraq’s government said it was cutting production by almost 1.5 mn bbl / d, analysts are forecasting that the UAE and Kuwait could be the next Gulf players to reduce output if the Strait of Hormuz blockage persists, Reuters reports.

A lack of storage space would be behind a shutdown, with JPMorgan analysts predicting the Emirates have 22 days left before all storage options are used up if exports don’t start moving again through the strait. Kuwait has even less, with 18 days.

Another industry that could suffer from the disruptions? Semiconductor manufacturing, as critical materials coming from the Middle East could become stranded, Reuters quotes South ‌Korean lawmaker Kim Young-bae as saying.

South Korea produces about two-thirds of the world’s memory chips and relies on the Middle East for some of its key materials, including helium from Qatar. Any disruption could raise energy costs and chip prices globally. The crisis also threatens Big Tech’s expansion of AI data centers in the region, after data centers were hit in the UAE and Bahrain.

Supply chain disruptions benefit no one. State AI firm G42 expects shipments of advanced US chips, “mostly Nvidia,” along with Cerebras and AMD, in the coming months. These chips are essential for the country’s data center projects, including the planned 5 GW Stargate UAE AI campus, part of Washington’s USD 500 bn Stargate program.

Watch this space

TRANSPORT — Beijing-based autonomous vehicle manufacturer Neolix has halted all autonomous delivery operations in Abu Dhabi, Reuters reports. The firm said it is keeping in touch with local authorities to monitor the situation and plans to resume operations once US/Israel-Iran regional tensions de-escalate.

ICYMI- The move follows a similar retreat by WeRide, which grounded its robotaxi fleet in Dubai earlier this week. The operator is still running in Abu Dhabi and Riyadh, with staff working from home for safety precautions.

WEATHER- Expect a high today of 27°C in Dubai and Abu Dhabi along with overnight lows in the 20°C range

The big story abroad

US President Donald Trump just fired Homeland Security Secretary Kristi Noem after months of controversy following fatal shootings of US citizens by federal officers and a controversial USD 220 mn advertising contract. Oklahoma Senator Markwayne Mullin is set to replace her by the end of the month. This marks the first cabinet minister under Trump’s second term to be fired.

The US is also reportedly considering implementing requirements to export Nvidia and AMD chips only to countries who have made investment pledges in the US. This would follow a tiered format, the Financial Times reports, depending on the compute power exchanging hands.

***

You’re reading EnterpriseAM UAE, your essential daily roundup of business, economics, and must-read news about the UAE, delivered straight to your inbox. We’re out Monday through Friday by 7am UAE time.

EnterpriseAM UAE is available without charge thanks to the generous support of our friends at Mashreq and Hassan Allam Properties.

Were you forwarded this email? Tap or click here to get your own copy of EnterpriseAM UAE.

Want to send us a story idea, request coverage, ask for a correction, or otherwise get in touch? Reach out to us on UAE@enterpriseAM.com .

DID YOU KNOW that we also cover Egypt, Saudi Arabia, and the MENA logistics industry?

***

Circle your calendar

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Sovereign wealth funds could pull out a new playbook in response to the war

Abu Dhabi sovereign wealth funds could scale back investments or redirect them toward national priorities in case of a prolonged disruption to the Strait of Hormuz and a subsequent disruption in energy flows, Global SWF’s head of data and research Daniel Brett wrote in a note seen by EnterpriseAM.

Funds may be redirected toward "resilience investments" if energy and processing infrastructure continue to be targeted in an escalation scenario, Brett wrote. Each one would focus on its own mandate:

The Abu Dhabi Investment Authority (Adia) would redirect investments toward “resilience sectors” within Abu Dhabi’s sovereign system;
Mubadala will refocus its capital on sectors supporting economic resilience and strategic supply chains;
L’Imad Holding, whose mandate includes strategic sectors like infrastructure, real estate, and urban mobility — with both a domestic and global focus — could start focusing capital on logistics and security infrastructure.

This would be unusual — Economist Hamzeh Al Gaaod previously told us that Gulf SWFs don’t currently have a stabilization mandate, and historically, funds like the Abu Dhabi Investment Authority are designed to “withstand volatility rather than respond to it,” Brett writes, with very infrequent withdrawals meant to be repurposed for the government.

What Adia would normally do: Rather than fully liquidating its positions, it tends to rebalance into market dislocations, Brett explained.

Meanwhile, funds like Mubadala and L’Imad, which focus on economic diversification and strategic sectors, would potentially slow investments or make changes to partnership structures depending on national priorities. L’Imad — which now holds all of ADQ's assets — would refocus its efforts toward maintaining domestic economic stability and protecting strategic holdings.

How likely are they to shift their priorities? Global SWF sees only a 25% likelihood of a prolonged disruption, which would tighten liquidity and see SWFs enforce a degree of discipline, while a scenario where an escalation would prompt a repurposing of funds is only 15% likely.

The most likely scenario? There’s a 40% chance of a temporary disruption to Hormuz, followed by a reopening and an environment of inflated oil and gas prices, leading to potential windfalls for Gulf sovereign institutions. In this case, they would increase investments strategically.

Adia would look toward liquid public markets; Mubadala would continue to prioritize investments in tech, infrastructure, and the energy transition; and L’Imad would increase “incremental investments in logistics, food security, energy, and infrastructure.”

Elsewhere in the region

PIF swings with oil revenues: During a disruption, Saudi Arabia’s Public Investment Fund (PIF) would likely rephase domestic gigaprojects to enforce capital discipline. High oil prices and Aramco dividends, however, act as a turbo-charger, enabling the fund to selectively deploy capital into global tech and infrastructure.

In an escalation scenario, PIF would shift its focus toward national resilience, prioritizing defense industrialization and logistics to secure the Kingdom’s supply chains.

The fund is already eyeing new investors to fuel its gigaprojects, planning to cut its capital spending by 15%, AGBI reports, citing sources it says are familiar with the matter. The fund aims to refine its 2026-2030 investment strategy by concentrating capital on a tighter group of portfolio companies and scaling them into global champions across sectors such as manufacturing, AI, and aviation. It also plans to focus on infrastructure, hospitality, and entertainment projects tied to Riyadh’s Expo 2030 and the 2034 World Cup.

What to watch

Discussions around the strain on Gulf budgets and a potential scaling back of investments are already reportedly taking place. The Financial Times reports that three of the four big Gulf economies — Saudi Arabia, the UAE, Kuwait and Qatar — have jointly discussed the strain under which their budget and economies have been put due to the war, but sources declined to name which countries were having these discussions.

Discussions include reviewing overseas investments. The UAE over the past year committed bns of USD to countries including the US, Canada, South Korea, and Africa, and poured bns into major acquisitions and sporting events, very often through its sovereign wealth funds. The US alone was set to receive some USD 1.4 tn in investments from the UAE.

Adia backs PayPay’s landmark US listing, divests from rallying Medline

The Abu Dhabi Investment Authority (Adia) just made a sale and an investment this week, as business looks to remain as usual for now.

On the investment front, Adia is backing Japanese digital payments platform PayPay’s IPO in the US, according to filings to the US Securities and Exchange Commission. Adia, along with Qatar Investment Authority’s Qatar Holdings and Visa International Service Association, intends to invest over USD 200 mn in the SoftBank subsidiary’s listing.

PayPay’s plan: PayPay is seeking a valuation of up to USD 13.4 bn in an upcoming offering on Nasdaq this month, under the ticker PAYP. It’ll offer up to 31.1 mn US depository shares, guiding on a price range of USD 17-20 apiece, the filing read.

IN CONTEXT- The listing could raise substantial capital for SoftBank, which is increasingly focusing on the AI sector, having committed USD 30 bn to OpenAI and being amongst the firms investing USD 500 bn in the Stargate project launched by US President Donald Trump. The Japanese bank is also active in the UAE’s AI scene, partnering alongside US heavyweights with Abu Dhabi’s AI giant G42 on the 5 GW US-UAE data center cluster in Abu Dhabi.

On the flip side, an Adia subsidiary joined several international investment players in selling 75 mn shares in US-based public healthcare giant Medline, according to filings to the US Securities and Exchange Commission. The subsidiary sold 5.1 mn shares, contributing to a sale by affiliates of Blackstone, Carlyle, and Hellman & Friedman that raised a total of USD 3.1 bn at USD 41 apiece, Bloomberg reports.

IN CONTEXT- The consortium moved to lock in gains following the healthcare firm’s 58% stock gain since its December USD 7.2 bn IPO, bypassing the standard six-month lock-up period following agreements with banks working on the debut.

A boon for Europe’s green hydrogen plans, courtesy of Mubadala’s Moeve

Green light for Europe’s green valley: Mubadala-owned Spanish renewables firm Moeve made a final investment decision on the 300 MW Onuba project — part of the Andalusian Green Hydrogen Valley — clearing the way to begin construction in the coming weeks on the EUR 1 bn first phase, according to a statement.

The initial 300 MW facility will have an annual capacity of 45k tons of green hydrogen, making it the largest in Southern Europe. The plant is earmarked for hard-to-abate sectors and is set to offset some 250k tons of CO2 annually.

It could get even larger and expand by another 100 MW, pending additional grid capacity and board approval.

Masdar has a seat at the table alongside Enalter — which is mainly owned by Enagas Renovable — while Moeve leads the development with a 51% stake.

BACKGROUND- Moeve — formerly Cepsa — is majority owned by Abu Dhabi’s Mubadala and US private equity firm Carlyle. The company shifted its focus toward low-carbon energy after decades as a traditional refiner, pledging EUR 8 bn to shift its business toward sustainability.

2PointZero Group acquires luxury packager

2PointZero bags an Italian luxury packaging company: IHC’s 2PointZero Group finalized its 60.8% acquisition of Italian luxury packager Isem Packaging Group for AED 704 mn, according to an ADX disclosure (pdf). The European firm — serving beauty, fashion, and nutraceuticals — caters to leading luxury clients including LVMH, Gucci, and L’Oréal. The purchase comes as the newly consolidated IHC subsidiary aims to expand its portfolio and deepen its industrial footprint.

ICYMI- An unidentified subsidiary of 2PointZero Group acquired a stake in Boston-based health tech wearables firm Whoop earlier this week, while another subsidiary, EPointZero Holding, increased its stake in Egyptian fintech Maseera Holding to 100% in December.

Asia loses altitude

The “sell America, buy Asia” trade has hit turbulence. One of 2026’s cleanest positioning calls is suddenly wobbling, as oil, war risk, and a firmer USD force investors to ask whether Asia’s rally was built for geopolitics after all, Bloomberg reports.

The market reaction has been blunt: The MSCI Asia Pacific Index is down about 6% this week, versus a 0.1% drop for the S&P 500, as funds rotate back toward US assets and the USD regains haven status. Taiwan is flashing a similar strain, as foreigners dumped USD 6.3 bn of equities in just the first three days of the week, putting the market on track for one of its largest weekly outflows on record.

The problem for Asia: Asia imports the shock more directly than most, with Japan and South Korea especially exposed to Hormuz-linked shipments. China, Japan, Korea, and Taiwan are all heavily import-dependent, making this oil spike “exponentially more corrosive” for Asia than for the West, Vantage’s Hebe Chen said. Goldman Sachs estimates a 20% jump in Brent would shave as much as 2% off regional earnings.

The AI trade is now part of the unwind. Investors are trimming last year’s hardware winners — especially South Korea and Taiwan — as higher energy costs collide with rich multiples and make capital-heavy tech stories harder to defend.

Credit is flashing the same warning: A Julius Baer note seen by EnterpriseAM says Asian CDS spreads are widening across oil-importing economies, with India up 6.6 bps in a week and higher-risk Southeast Asian names moving 4-6 bps, as markets begin pricing a steeper regional risk premium if the war drags on.

Truth is, some of that fatigue predated the geopolitical jitters: Foreign investors sold Asian equities for a fourth straight month in February, Reuters reports, with South Korea alone posting record outflows of USD 13.7 bn, as AI valuation nerves had already started spilling far beyond Wall Street.

MARKETS THIS MORNING-

The selloff across Asian equities continues this morning, with South Korea’s Kospi falling 1.9% and Japan’s Nikkei down 0.3%. Hong Kong’s Hang Seng seems to be the only outlier, gaining 0.7%. Meanwhile, Wall Street futures are edging higher as investors await nonfarm payroll data for February out later today.

ADX	10,045	-2.0% (YTD: +0.5%)
DFM	6,115	-1.3% (YTD: +1.1%)
Nasdaq Dubai UAE20	5,016	-1.8% (YTD: +2.6%)
USD : AED CBUAE	Buy 3.67	Sell 3.67
EIBOR	3.5% o/n	3.8% 1 yr
TASI	10,776	+0.8% (YTD: +2.7%)
EGX30	47,516	+2.2% (YTD: +13.6%)
S&P 500	6,831	-0.6% (YTD: -0.2%)
FTSE 100	10,414	-1.5% (YTD: +4.9%)
Euro Stoxx 50	5,783	-1.5% (YTD: -0.2%)
Brent crude	USD 85.41	+4.9%
Natural gas (Nymex)	USD 2.98	-0.9%
Gold	USD 5,087	+0.2%
BTC	USD 71,136	-2.4% (YTD: -19.8%)
Chimera JP Morgan UAE Bond UCITS ETF	AED 3.75	+2.7% (YTD: +2.2%)
S&P MENA Bond & Sukuk	152.36	+0.0% (YTD: +0.3%)
VIX (Volatility Index)	23.75	+12.3% (YTD: +58.9%)

THE CLOSING BELL-

The ADX fell 2.0% yesterday on turnover of AED 1.9 bn. The index is up 0.5% YTD.

In the green: Ins. House (+15.0%), E7 Group Warrants (+15.0%), and Al Buhaira National Ins. Company (+15.0%).

In the red: United Arab Bank (-5.0%), Aldar Properties (-5.0%), and Presight AI Holding (-4.9%).

Over on the DFM, the index fell 1.3% on turnover of AED 1.4 bn. Meanwhile, Nasdaq Dubai was down 1.8%.

UAE, Japan finish CEPA negotiations, discuss energy supplies in light of disruptions

The UAE and Japan wrapped up talks for a comprehensive economic partnership agreement (CEPA) during a visit by the Industry and Advanced Technology Minister Sultan Al Jaber to Tokyo, according to a statement from Japan’s Foreign Ministry. The two countries kicked off talks for the trade agreement back in 2024.

Energy discussions were also on the table, with the current standstill in the Strait of Hormuz and its implications on Japan’s energy security featuring in the conversation. Al Jaber affirmed the UAE’s commitment to ensuring Japan’s oil supply, according to a separate statement, while Bloomberg quotes him as saying ahead of the meeting that “while your energy security continues to be our priority, we will not be able to do much if there is any distortion in the Strait of Hormuz.”

In context: Japan, along with much of Asia, relies heavily on crude imports from the Middle East. The effective closure of the Strait has forced countries like China to ban exports of crude and to begin lobbying Iran for safe passage.

CALENDAR

MARCH

19-20 March (Thursday-Friday): Eid Al Fitr, public holiday.

26-28 March (Thursday-Saturday): Social Capital Conference, Dubai.

28-29 March (Saturday-Sunday): Emirates International Congress on AI & Visionary Leadership in Transforming Healthcare, Adnec Center Abu Dhabi.

30 March - 2 April (Monday-Thursday): IAAPA Middle East Exhibition and Conference, Adnec Center, Abu Dhabi.

31 March - 2 April (Tuesday-Thursday): Arab Media Summit, Dubai.

31 March-2 April (Tuesday-Thursday): Investopia, Abu Dhabi.

APRIL

6-9 April (Monday-Thursday): Dubai AI Week, Dubai.

7-8 April (Tuesday-Wednesday): Dubai AI Festival, Dubai World Trade Center, Dubai.

7-9 April (Tuesday-Thursday): Future Health Summit, Adnec Center Abu Dhabi.

7-9 April (Tuesday-Thursday): Middle East Energy, Dubai World Trade Center, Dubai.

13-15 April (Monday-Wednesday): AIM Congress, Dubai World Trade Center.

13-15 April (Monday-Wednesday): The International Glass Manufacturing Show, Dubai.

14-16 April: (Tuesday-Thursday): International Property Show, Sheikh Zayed Rd, Dubai.

21-23 April (Tuesday-Thursday): UITP Public Transport Summit, Dubai.

28-29 April (Tuesday-Wednesday): Innovation Summit Middle East & Africa, Abu Dhabi.

29 April (Wednesday): Digital Transformation Summit, Sofitel, Abu Dhabi.

MAY

4-8 May (Wednesday-Saturday): Make It in the Emirates, Adnec Center, Abu Dhabi.

8-24 May (Saturday-Sunday): Dubai Esports and Games Festival, Dubai.

11-13 May (Monday-Wednesday): AI Everything Global, Adnec Center, Abu Dhabi.

11-15 May (Monday-Friday): Dubai Future Finance Week, Dubai.

12-14 May (Tuesday-Thursday): Airport Show, Dubai World Trade Center, Dubai.

19-20 May (Tuesday-Wednesday): Capital Market Summit, Madinat Jumeirah, Dubai.

19-22 May (Tuesday-Friday): Abu Dhabi Water and Energy Week, Adnec Center, Abu Dhabi.

20-21 May (Wednesday-Thursday): Arab Competition Forum, Dubai.

JUNE

3-4 June (Wednesday-Thursday): Annual MENA Investor Conference, Ritz-Carlton DIFC, Dubai.

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

JULY

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

OCTOBER

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

Signposted to happen sometime in October 2026:

Abu Dhabi Space Week, Abu Dhabi.

NOVEMBER

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

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

DECEMBER

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

Signposted to happen in 2026:

Investopia Global Talks, Tashkent.

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;
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;
The commissioning of the seventh phase of Mohammed bin Rashid Al Maktoum Solar Park.

Sections

About

Privacy & Support

Get EnterpriseAM daily