Stocks in Dubai have posted their biggest gains in 12 months. Is it still worth buying them?

Dubai’s main stock market index is rising at its fastest pace in the second quarter in the past 12 months, according to Bloomberg. This positive trend is driven by the ceasefire in the Middle East, which has helped bring investment capital back to the region. At the same time, analysts agree that the current rally has not yet reached its full potential, but the market’s outlook will depend on one key condition.

The Dubai Financial Market (DFM) General Index rose by approximately 11% compared to the end of the previous quarter. This helped it nearly offset the losses incurred since the beginning of 2026, according to Bloomberg. However, while this rebound suggests that Dubai as a whole remains an attractive investment destination, the market is still well below the levels it had reached before the start of the U.S.-Israel war against Iran, Bloomberg reports.

The recovery in the second quarter affected broad segments of the market: during this period, 34 of the 41 stocks in the index rose, according to Bloomberg. The biggest contributors were the energy and infrastructure company Etihad Energy Holding and the low-cost carrier Air Arabia, whose shares have risen 79% and 34%, respectively, since the beginning of June.

The conflict in the Middle East has had a significant impact on the UAE, which has also been reflected in local markets, noted Salah Shamma, head of equity investments for the Middle East and North Africa at Franklin Templeton, in comments to Bloomberg. The risk premium is currently declining, he added, but the current growth is mainly “driven by an influx of liquidity”: “The market is more in the process of finding solid ground beneath its feet than making a confident statement about its future prospects.”

There are also signs that some expatriate bankers and top executives are returning, and Iran is resuming flights between Tehran and Dubai. According to Shamma, a lasting truce and decisive action by local authorities should enable Dubai to regain its appeal to people and capital.

"If this scenario plays out, all the conditions for a more sustainable recovery will be in place," he concluded (as quoted by Bloomberg).

Dominic Bokor-Ingram, a fund manager at Fiera Capital UK, describes his long-term outlook on Dubai as “quite positive.” At the same time, however, he views the current rally as a “binary event” that hinges critically on whether the interim peace agreement between the U.S. and Iran can truly put an end to the war.

"Just as the market rebounded amid ongoing negotiations, it could very quickly reverse course," he emphasized (as quoted by Bloomberg).

Shares of Dubai-based companies—which are heavily dependent on the tourism, real estate, and financial services sectors—entered a “bear market” in March, following the outbreak of the war. A series of Iranian missile strikes threatened Dubai’s status as the Middle East’s premier safe-haven financial hub. The situation was stabilized thanks to the signing of a spring ceasefire agreement, which ensured a positive second quarter for the market.

Last week, the U.S. and Iran exchanged strikes on each other’s positions for several days—the first such exchange since the memorandum was signed—but over the weekend they agreed to halt the attacks and begin negotiations regarding the situation in the Strait of Hormuz. According to one of Axios’ sources, the parties intend to hold a meeting on June 30 in Qatar.

Nevertheless, the situation in the region remains extremely tense, Bloomberg notes . In particular, the agreement between Israel and Lebanon to end the conflict has met with resistance from the Tehran-backed group Hezbollah.

This article was AI-translated and verified by a human editor