As missiles and drones flew over the United Arab Emirates, traders and Wall Street executives who had flocked to the Gulf in recent years found themselves facing a threat that few had anticipated in a country that had touted itself as the region’s safest hub.
Several hedge funds almost immediately began reviewing business-continuity arrangements, according to people familiar with the matter. Global banks including JPMorgan Chase & Co and Citigroup Inc instructed employees to work from home, while other companies urged employees to shelter in place and avoid sensitive areas around foreign embassies and military installations.
Air defense systems intercepted projectiles Dubai and Abu Dhabi on the horizon over the weekendDebris and smoke were visible near high-profile commercial districts and luxury developments, including the Palm Jumeirah.
A suspected airstrike damaged facilities at Dubai International Airport, while debris from an intercepted drone fell on the facade of a building at Etihad Towers, the site of diplomatic missions in the UAE capital.
The attacks are part of an unprecedented Iranian response to US and Israeli attacks killed Supreme Leader Ayatollah Ali Khamenei shattered the long-held perception that the UAE was insulated from the instability of its neighborhood – an image that has underpinned its rapid rise as a magnet for hedge funds, private capital and global banks.
On Saturday night, senior executives from Singapore-based hedge fund Diamon Asia Capital met to discuss, among other things, what to do if the conflict escalates into all-out war. Deputy Chief Executive Officer and Managing Partner Kenneth Kan, who like most Singaporean men had served in the country’s armed forces, eventually helped send the guidelines to employees across the region.
Apart from its office of 17 employees in the Dubai International Financial Centre, other employees were also stranded due to the cancellation of flights and closure of airspace. The measures are mostly common sense, with employees advised to stay indoors and away from glass windows, military installations and large public gatherings. Affected employees are now checking in daily and maintaining a roster so the firm can track their visits and assist where needed; Hotel rooms have been booked for people unable to leave the city.
“We’ve had to deal with COVID and the Hong Kong riots before, but in terms of war-related security issues, this is a first,” Kan said.
Over the past few years, Dubai has emerged as a rapidly growing hedge fund centre. The DIFC now hosts more than 100 firms, including Millennium Management and ExodusPoint Capital Management, while other firms such as Ken Griffin’s Citadel have outlined plans to expand there.
Abu Dhabi is also moving in, with Hudson Bay Capital Management, Marshall Wace and Arini setting up offices, and an emirate-based entity taking a minority stake in Brevan Howard Asset Management.
contingency plans
While the initial hope among some executives was that tensions would soon subside, the scope of the attacks forced companies to reconsider. Some hedge funds worked with staff to secure hotel accommodation outside the DIFC, and others explored evacuation routes through Muscat in Oman, which had been spared from the strike until Sunday.
International financial institutions proceeded with caution, balancing the safety of employees with the need to provide business continuity to customers.
A representative for Citigroup said it is taking steps to keep employees and their families safe while continuing to serve customers, supported by strong contingency plans. JPMorgan said employees will work from home for the next 48 hours while they assess the situation. BlackRock Inc. said its immediate focus is to ensure that employees and customers are safe and get the support they need.
At least one large asset manager in the region said his leadership had been in contact with authorities in Abu Dhabi, assuring them that authorities would take the necessary measures to protect residents and businesses.
“This is a very serious situation, and we are all taking extra precautions and are conscious of what is happening around the area,” said Kish Desai, who moved from London last year to open Tourmaline Partners in Dubai. “The UAE is doing an incredible job in terms of protecting itself and its residents and I think the majority of people feel safe here. We all hope the situation will recover quickly and this is just a short-term lapse.”
Nevertheless, the mood in the UAE’s commercial centers was soft. Streets in both Dubai and Abu Dhabi remained unusually quiet for the weekend, with many shops closed, although delivery services and taxis remained operational.
Officials advised residents to work remotely, postpone business travel, limit unnecessary movement and follow official guidance. Panic buying was seen at supermarkets, leading the government to urge people not to stock up and insist that strategic stockpiles of essential goods remained strong – even with staples temporarily removed from some shelves.
Global aviation was heavily disrupted, with major transit points elsewhere in the Gulf, including the United Arab Emirates and Qatar, closed or facing severe restrictions. Authorities took steps to help stranded travelers, urging hotels to extend their stays and agreeing to cover the costs of hosting and accommodation.
Nevertheless, due to the closure of flights, some travelers sought other options to leave the UAE. Hussein Nasser-Eddin, chief executive of Dubai-based security firm Crownox, said it evacuated several high-net-worth individuals and chief executives from across the border to Oman. “Most of the requests we are getting are for land from UAE to Oman and from Qatar to Saudi,” he said.
first real test
These developments threaten both Dubai’s emergence as a hedge-fund hub and Abu Dhabi’s expansion as a sovereign-asset powerhouse – twin ambitions built on a reputation for stability that attracted capital during the Arab Spring, the pandemic and the influx of money following Ukraine.
The carefully crafted “security premium” is now wearing thin. Some officials told Bloomberg News that the influx could slow if instability persists, with contingency plans such as relocation options already being discussed.
Others struck a more measured tone, telling colleagues and family abroad that daily life remained functional despite the dramatic images circulating online, pointing to transport networks and open restaurants. A hedge fund executive who watched the missiles being intercepted in a hotel bar on Sunday said his fellow patrons were similarly surprised, adding that people coming from Russia in particular are familiar with such situations.
But Hasnain Malik, head of emerging markets equities and geopolitics strategy at Telmar, said the scale of the rise exaggerated regional risks, adding that Dubai’s property prices could be particularly exposed, given how rare such disruptions are and how high valuations have soared after a strong post-pandemic rally.
Property prices in Dubai have soared nearly 70% in four years, while Abu Dhabi has deployed vast sovereign capital in global bargains as the Gulf competes with the global financial hub to attract talent and wealth.
Some officials argued that the UAE has historically managed to turn crises into catalysts for growth and is expected to do so again, given how quickly it reopened during Covid-19 and absorbed capital flows following Russia’s invasion of Ukraine.
And some headhunters said the professional opportunities and tax benefits could, over time, outweigh security concerns for many immigrants already embedded in the ecosystem. But that thesis can be tested by an important factor: how long the attacks last.
As one executive put it, a prolonged period of disruption risks challenging one of the UAE’s central propositions – that it provides certainty in an uncertain region. Vishwanathan Shankar, a former top executive of Standard Chartered Plc and founder of Gateway Partners, struck an optimistic note.
“I don’t think there will be any impact on the UAE’s status as an emerging financial centre,” he said. “Historically, the UAE has been brilliant at turning every crisis into an opportunity. I hope that will be the case.”
