After a volatile start, global markets ended 2025 on a strong note, boosted by the AI boom and gains in European defence stocks. UAE markets also performed well, but Dubai and Abu Dhabi followed different paths.
Dubai’s DFM index hit multi-year highs, up 24% including dividends, driven by active trading and new listings, outperforming the S&P 500. Abu Dhabi’s ADX saw more modest gains of just over 8%, reflecting volatility in oil markets.
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Not all sectors moved equally. In Dubai, real estate and property-linked stocks were among the top performers. In Abu Dhabi, banks and new economy names like Presight AI led the market. The Abu Dhabi Islamic Bank stood out, with shares climbing over 40% thanks to strong activity across retail and corporate banking. Property-linked names such as Union Properties and Amlak Finance also benefitted from Dubai’s real estate cycle, supported by population growth, new visa pathways, and sustained interest from international buyers.
Foreign inflows were another key theme. UAE equities continued to attract international capital, helped by the country’s safe-haven reputation, regional hub status, and a steady pipeline of IPOs across both exchanges.
The macro backdrop
Heading into 2026, the UAE’s economy remains on a supportive path. The country is steadily shifting from oil dependence towards a more diversified economy, with non-oil sectors now accounting for a substantial share of GDP.
The Central Bank of the UAE expects real GDP growth of around 5.3% in 2026, up from roughly 4.9% in 2025, driven by both oil and non-oil activity. Inflation remains low. Headline inflation slowed to around 0.7% in mid-2025, and the central bank expects it to average about 1.8% in 2026, giving policymakers room to support growth.
With the dirham pegged to the US dollar, UAE monetary policy generally follows the US Federal Reserve. Rate cuts in late 2025 affected the region, and while easing may slow in early 2026, US policy expectations remain a key factor for local markets.
Credit growth has stayed strong, with loans rising by double digits year-on-year in 2025. Banks remain well capitalised, with low non-performing loan ratios.
Tourism, aviation, and logistics continue to be major growth engines, especially in Dubai, where transport and storage are among the fastest-growing sectors. Residential real estate also showed strong momentum, backed by population inflows and policy support.
Sectors to watch in 2026
Banks and financials
Banks remain a core part of both the ADX and DFM. The Abu Dhabi Islamic Bank, the Abu Dhabi Commercial Bank and other large institutions delivered healthy earnings growth, supported by rising credit demand, strong capital buffers, and steady interest margins.
As interest rates edge lower in 2026, margins may soften, but should be partly offset by higher lending volumes, fee income, and continued safe-haven inflows into the UAE. Returns may be moderate compared with 2025, but banks are expected to remain a key pillar of the market.
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Real estate and property-linked stocks
Dubai’s real estate cycle remains a top theme for local investors. Developers and property-linked names such as Emaar, Aldar, and Union Properties continue to benefit from strong transaction volumes, population growth, and steady interest from international buyers.
Mortgage costs are expected to ease gradually as interest rates decline, supporting the wider real estate ecosystem. However, higher valuations mean strong execution is a must.
Energy and commodities
Energy stocks remain especially important for Abu Dhabi. The 2026 outlook depends on oil prices, OPEC+ policy, and global demand.
Oil prices softened at the end of 2025, which weighed on the ADX. Looking ahead, demand is expected to improve, and the projected surplus should narrow, with OPEC maintaining a positive view on demand.
AI, tech and digital infrastructure
The UAE continues to position itself as a regional hub for artificial intelligence and advanced digital infrastructure. Presight AI has been one of ADX’s standout tech names, reflecting Abu Dhabi’s focus on data analytics, AI, and digital transformation.
A national innovation strategy is driving investment in AI, cloud computing, cybersecurity, and smart-city infrastructure. Generative AI projects are already running in healthcare, finance, and media, keeping capital flowing into the sector and offering investors a growth opportunity that is both local and global.
IPO pipeline and capital markets
Another key theme for 2026 is the ongoing IPO pipeline. Both ADX and DFM have benefitted from a steady flow of new listings in recent years, including government-related entities and family-owned businesses.
Further IPOs in real estate, logistics, utilities and tech could deepen markets and expand opportunities for investors.
Risks to consider
The UAE story is promising, but not without risks. A sustained decline in oil prices could weigh on fiscal revenues, market sentiment and parts of the equity market, even as non-oil diversification continues.
Global growth remains uncertain, especially in Europe and China. A sharper slowdown could impact trade, tourism, and corporate earnings. With valuations high in areas like real estate and tech, delivering consistent earnings will be even more important in 2026
Optimistic outlook for 2026
Overall, the UAE outlook remains positive. Economic growth is expected to stay solid, inflation low, and policy supportive. Banks are well capitalised, capital markets are deepening, and the country continues to attract foreign investment and skilled labour.
Earnings growth across banking, real estate, energy and technology should continue to support equity investors, even if returns are more measured than previous boom years. The UAE’s stability, ongoing diversification and focus on innovation strengthen its investment case heading into 2026.
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