MSCI UAE ETF Loses Just 2.1% Despite Strait of Hormuz Attacks
iShares MSCI UAE ETF (UAE), with $265 million assets, has lost 2.1% year-to-date despite disruptions to Strait of Hormuz shipping from Iranian missile and drone attacks. GCC ETFs have stabilized, with Saudi Arabia’s ETF up 5.5% YTD thanks to rerouting 4 million barrels per day via the Red Sea.
1. UAE ETF Performance
iShares MSCI UAE ETF has $265 million in assets and is down 2.1% year-to-date, outperforming expectations given regional tensions. The ETF trails Saudi Arabia’s 5.5% gain YTD but shows resilience relative to other Gulf country funds.
2. Strait of Hormuz Disruptions
Iranian missile and drone strikes have severely disrupted shipping through the Strait of Hormuz, threatening exports from Gulf energy infrastructure. Despite this, investors have largely refrained from selling off Gulf ETFs at scale.
3. Saudi ETF Rerouting and Composition
Saudi Arabia’s ETF has benefited from rerouting approximately 4 million barrels per day of crude via the Red Sea, mitigating the impact of a closed strait and rising oil prices. Energy constitutes just 13% of its holdings, while financials and materials make up the bulk of its portfolio.
4. Gulf ETFs as War Indicators
Gulf country ETFs are serving as real-time gauges of investor sentiment on the Iran war’s potential escalation. Stabilizing or rebounding fund flows suggest markets view worst-case geopolitical scenarios as less likely.