Conflict, Capital and Conviction: A Gulf Perspective 

The events of late February mark a profound geopolitical shift. 

Following months of fragile nuclear diplomacy, the United States and Israel launched coordinated strikes on Iranian military and nuclear infrastructure. The death of Ayatollah Khamenei and senior leadership figures triggered immediate retaliation. Missiles and drones have targeted Israel and US bases across the Gulf. Proxy fronts have reopened. The region is tense. The essential question for investors is not what has happened. It is what changes structurally from here. 

What markets are telling us 

The early response has been orderly. Oil has risen sharply. Gold has strengthened. The US dollar and Swiss franc have benefited. US Government bonds initially strengthened but then weakened due to increased inflation risk. These are rational adjustments to heightened geopolitical risk. The fulcrum is energy. 

The Strait of Hormuz carries roughly one fifth of global oil exports. A sustained disruption would alter inflation expectations and growth assumptions worldwide. If crude were to revisit 100 to 110 dollars per barrel, the consequences would extend beyond markets and into corporate margins, consumer confidence and monetary policy. 

For now, oil reflects risk, not rupture. 

Equity markets have opened lower but stabilised. Energy and defence sectors have strengthened. UK equities, with their commodity bias, have proven relatively resilient. Futures markets in the US have already retraced a portion of early losses. Continental European equity markets are bearing biggest losses so far out of developed markets. This is repricing, not capitulation. 

Dubai in context 

Dubai’s rise over the past decade has not been accidental. It has been built on regulatory evolution, institutional credibility, openness to global capital and a competitive tax environment. Periods of instability tend to produce two simultaneous effects: short term volatility and long-term capital consolidation into trusted jurisdictions. The UAE’s fiscal position and economic diversification provide resilience. If higher energy prices persist, parts of the region benefit from stronger public finances. That matters. But duration is decisive. A contained episode reinforces Dubai’s role as a stable gateway between East and West. A prolonged escalation, particularly one that disrupts trade routes or energy flows, would test global growth assumptions. Our responsibility is to assess both possibilities without bias. 

Positioning before the event 

We entered 2026 conservatively positioned. Global equity valuations, particularly in the United States, were elevated relative to historical norms. Balanced portfolios held moderate equity exposure, typically 20 to 25%, complemented by: 

• Market neutral strategies designed to perform through volatility 

• Asset backed lending with a focus on real estate backed lending 

• Select regional equity overweights, e.g. Japan 

This was not a geopolitical forecast but an expression of valuation discipline. We prioritise resilience before opportunity. 

What would change the outlook? 

Three developments would materially alter the investment landscape: 

• Sustained disruption to energy and water supplies 

• A sharp and persistent rise in inflation expectations 

• Evidence that corporate earnings momentum is faltering 

Absent these, markets may continue to treat the conflict as a geopolitical premium rather than an economic shock. However, caution is warranted, while it is too early to judge how this conflict evolves, we think it may last longer than currently expected and will inflict damage on the real economy even if the attacks end within a few weeks. For that reason, we have reduced equity exposure over the last two days. This is not a dramatic repositioning but a measured recalibration. When probabilities shift, portfolios must adjust. This adjustment reflects risk management rather than prediction. 

The broader perspective 

Dubai’s long-term trajectory remains supported by structural forces: capital mobility, demographic expansion, entrepreneurial migration and regional wealth accumulation. Periods like this reinforce why resilience must precede opportunity. At Hundle, we do not position portfolios for headlines. We position them for cycles. We strengthen foundations first. Then we act decisively when conditions improve. Periods of uncertainty often create the clearest differentiation between speculation and stewardship. Capital that is patient, disciplined and well-structured does not retreat. It recalibrates.  And recalibration, done well, builds value beyond the balance sheet. 

For those who value tomorrow, this is not a time for reaction. It is a time for perspective.