Global finance braces for mounting Iran crisis risks

14:28

By: Dakir Madiha

Global finance braces for mounting Iran crisis risks

Banks, hedge funds and insurers spent the weekend racing to map out their exposure to the Middle East as the escalating confrontation between Iran, the United States and Israel disrupted markets, travel and business operations across the Gulf. The latest round of strikes, which hit targets in the United Arab Emirates and other Gulf states, raised new questions over whether Dubai can retain its status as a safe regional hub for global capital. Firms focused first on staff safety and business continuity, while investors weighed the impact on oil prices, asset valuations and the region’s longer-term appeal as a base for wealth and financial services.

Over the weekend, large global institutions activated emergency protocols or tightened existing contingency plans. Barclays redeployed more than 30 employees to work on Sunday so they could monitor the New Zealand market open, treating it as an early barometer of sentiment after the strikes. JPMorgan and Citigroup told staff in Dubai and Abu Dhabi to work from home or shelter away from sensitive locations for at least 48 hours, while BlackRock said its immediate priority was ensuring employees and clients in the region were safe and supported. Singapore-based hedge fund Dymon Asia Capital convened a late-night call of senior executives to prepare for a possible deeper escalation, including detailed guidance for staff in Dubai and employees stranded as flight cancellations and airspace closures rippled across the Gulf.

Other firms with significant Middle East footprints also moved quickly. Crypto exchange Bybit activated its business continuity plan in the UAE, conducting individual safety checks on employees, designating backup managers for all critical roles and postponing relocations to the country until further notice. The company has also fitted its UAE office with power backup systems designed to sustain at least eight hours of operations during an emergency, while strengthening remote work tools to keep trading and core services running. Regional security firms reported a surge in evacuation requests from high-net-worth clients seeking to leave the UAE and Qatar over land routes into Oman and Saudi Arabia after flights were grounded or severely restricted.

In Asia, insurers and asset managers spent the weekend combing through portfolios for Middle East exposure. Some of Taiwan’s largest life insurers, including Cathay Life Insurance and Nan Shan Life Insurance, carried out internal reviews of their holdings in the region after the latest round of strikes. Taiwan’s Financial Supervisory Commission has previously estimated that the island’s financial holding companies had around NT$1.6 trillion, or roughly $51 billion, in exposure to major Middle Eastern markets as of December, underlining the scale of potential risk. Traders at Taiwanese insurance groups prepared for sharp swings in oil prices and bond yields at the start of the week, aware that further escalation could tighten financial conditions well beyond the Gulf.

Market stress was already visible across Gulf exchanges. The United Arab Emirates ordered its stock markets closed on Monday and Tuesday, an unusual move that effectively froze trading in billions of dollars of listed assets as authorities assessed damage to airports, ports and residential areas. Gulf markets that did open on Sunday recorded sharp losses, with Saudi Arabia’s benchmark index dropping more than 4% at one stage and Egypt’s main index falling by more than 5% before trimming part of the decline. Kuwait halted trading until further notice, while markets in Oman and other Gulf states also ended lower, reflecting investor concern that the conflict could drag on and deepen.

The strikes have intensified scrutiny of Dubai’s role as a financial hub and safe haven for global wealth. Plumes of smoke were seen over parts of the city after Iranian projectiles were intercepted, and Dubai International Airport suffered damage from a suspected aerial strike, forcing flight disruptions at one of the world’s busiest transit points. Some lawyers and wealth advisers said the events could influence where family offices and high-net-worth individuals choose to base their assets in the future, especially if security concerns persist. Patrick Yip, Asia vice chair at law firm Mishcon de Reya, said the crisis could act as a wake-up call for investors who had treated the city as a low-risk gateway to the region.

Analysts at Barclays warned clients that markets may not be fully pricing the risk that efforts to contain the conflict could fail, noting that investors appear to be relying on past patterns of quick de‑escalation. Goldman Sachs scheduled a client call for Monday to examine implications across oil, risk assets and emerging markets, as portfolio managers reassessed hedging strategies and the scope for further volatility. For now, financial firms are trying to balance the need to keep trading, advisory and wealth operations functioning with the possibility that larger and more sustained disruptions to the Gulf’s infrastructure and capital flows could still lie ahead.