Personal finance experts are urging people in the UAE to “remain calm” with their money amid the continuing Iran war.
Local banking services were disrupted, two UAE Amazon data centres in the UAE were struck, and local stock markets were closed for two days, reopening at a dip.
“Against a backdrop of heightened geopolitical tensions, global market volatility and cautious investor sentiment, any upset in the financial system can understandably amplify anxiety,” said Sumeet Gill, vice president of investments at insurance brokerage Continental International Group.
“In the UAE, where digital banking penetration is high and day-to-day transactions are largely cashless, even short-term banking disruptions can feel more significant than they may be structurally.”
It’s important, however, to separate operational or technical disruptions from systemic financial risk, she added. “The UAE banking sector remains well-capitalised and tightly regulated under the oversight of the Central Bank of the UAE, which maintains strong liquidity and capital adequacy requirements across institutions.”
Steve Cronin, founder of personal finance consultancy DeadSimpleSaving, stressed that people should “remain calm, stay resilient and stay prepared”.
“Avoid any kind of knee-jerk panic reaction. Any change should either be repositioning some cash or investing for the long term.”
Banking outages
Recent disruptions to local banking services, including FAB and Emirates NBD, have had customers asking whether they should move their money out of the country, but that would be an “overreaction”, said Praveen Gupta, professor and chairperson at Manipal Business School – MAHE Dubai.
“For most depositors, there is little reason to panic or move funds elsewhere,” he told The National. “Acting out of fear during moments of uncertainty can often lead to unnecessary financial decisions that may not serve one’s long-term interests.”
That said, it is wise to hold between Dh1,000 and Dh10,000 in cash right now, said Mr Cronin, as well as have more than one banking relationship in the UAE. “If you rely on one bank, you are vulnerable to its services going down.”
Carol Glynn, founder of personal finance platform Conscious Finance Coaching, agreed. “It’s never a good idea to have your money is one place,” she said.
“So, if you do have just one bank account, now would be a good time to set up a second. Online banks like Wio are superfast and easy to set up online. It is a good time to split it out in case access to one is hard.”
Stock markets
On the local stock market, Vadim Merkulov, managing director of multi – market trading terminal Freedom Broker, said Abu Dhabi Securities Exchange and Dubai Financial Market were able to absorb the initial shock after a two-day forced closure, but volatility will likely persist.
“For personal investors, the priority is clear: avoid panic-selling, preserve cash liquidity and use this moment as a trigger to build an emergency fund covering three to six months of expenses – held across more than one institution.”
Ms Gill said short-term disruptions can affect sentiment more than fundamentals. “Stocks listed on the Abu Dhabi Securities Exchange and the Dubai Financial Market may see temporary volatility if investors react emotionally. However, unless the disruption reflects deeper credit or liquidity concerns, the impact on valuations is usually limited and short-lived.”
Market volatility during periods of geopolitical or economic uncertainty is not unusual, added Mr Gupta. “Sectors such as tourism, aviation or real estate can sometimes be more sensitive to regional developments. This may lead to short-term fluctuations in certain stocks or indices.”
Resist the urge to panic sell any stocks, as investing in equities should always be approached with a long-term perspective, he said.
“Temporary market corrections can create opportunities for investors to identify fundamentally strong companies trading at more attractive valuations.”
Anyone considering entering the market must be disciplined in their strategy, Mr Gupta said. “Instead of investing a lump sum all at once, investors may consider gradually allocating capital over time, a strategy often referred to as averaging or staggered investing.”
Also, prioritise companies with strong fundamentals and avoid speculative investments right now, he added.
Don’t overexpose yourself to one country’s stocks, either, said Mr Cronin. “Move to a globally diversified fund instead.”
On buying Bitcoin, Ms Glynn said: “Do I think we will need it to essentially survive and pay for our daily needs in the short term? I think we are a long way away from that … but diversifying investments is always a good idea so buying Bitcoin while it's on sale is worth considering if it's something you are interested in.”
Beware of fraud
During times of uncertainty, fraudsters take the opportunity to create new scams, so everyone should take steps to protect their money, said Ms Glynn. For example, reduce the transfer limits on your current and savings accounts so there’s a cap on the amount anyone can take.
“Do the same with your credit cards, but it’s daily transaction limits rather than transfer limits,” she said. “If you are worried about online fraud, you can also turn off online transactions on your card. If you do need to shop online, you can turn it on and off easily and as needed.”
Also, don’t use debit cards for online purchases. “Credit cards have protections, debit cards do not,” she added.
Ultimately, it’s important to have “strong personal financial discipline” at this time, said Mr Gupta. That comes down to preparation, diversification and avoiding decisions driven by panic, he said.
With limited knowledge of what will happen, it’s prudent to stick to the fundamentals, said Ms Glynn. “To be clear, a lot of this is just so we can feel in control and prepared. Most of it I don't think will be needed, but at least we can feel we are prepared and cover ourselves for any eventuality.”
