Gulf

1. More US warships deployed
2. Saudi FDI falls 20%
3. UAE cities grow closer
4. Fundraising for water
5. Man City ruling fallout

Week ahead: Oil traders descend on Fujairah, and the men’s soccer Arabian Gulf Cup final in Jeddah.

Saudi Arabia’s recently appointed stock market regulator has had a whirlwind few weeks. Mazen Al-Sudairi is leading an overhaul of the Capital Market Authority’s rules, one of the kingdom’s biggest revamps since it opened its stocks to foreign investors in 2015.

That shift, from shunning so-called “hot money” to courting foreign capital, was essential to boosting the market’s global importance and bringing in foreign cash to help fund Crown Prince Mohammed bin Salman’s economic transformation program.

Bankers and lawyers here in Riyadh worry, though, that the latest effort, rather than fueling a revival of the Tadawul, may hamper it.

Saudi stocks — which saw a multiyear bull run end in 2022 — have rebounded since the Iran war broke out and outperformed peers in the region thanks to the kingdom’s ability to export crude. But the index is still down 3% since Feb. 28, while the MSCI Emerging Markets Index has risen 6% in the same period. Overall, falling valuations, compounded by the war, have added to the poor sentiment and put off new listings. The government needs a thriving market to offload its domestic portfolio and recycle the capital into new ventures.

Investors had anticipated a recovery on promised changes to foreign ownership limits. Instead, the regulator turned its attention to listing rules, aiming to attract mature, well-run companies onto the stock exchange — quality over quantity.

The proposals are under consultation and could change before they are finalized, but critics (none of whom would go on the record, fearing reprisal) warn that requirements such as hard underwriting, which forces banks to take on more IPO risk, could delay deals already in the pipeline. Smaller banks may not be able to participate in the process and even large ones may initially be wary of untested new rules.

Therein lies the CMA’s dilemma: By weeding out listings that aren’t ready for public markets — and many weren’t, based on the performance of many recent IPOs — the regulator could end up depressing IPO activity and ultimately dragging down valuations, instead of restoring confidence among local investors sitting on underperforming portfolios.

US reinforcements overshadow war lull

While leaders in the US and Iran swing between talk of deals and annihilation, a monthlong pause in American strikes on Iran may be nearing its end as reinforcements head to the region. Washington is deploying additional warships carrying at least 9,000 troops, with the USS Theodore Roosevelt carrier group expected to arrive by late November, the Financial Times reported. US President Donald Trump is considering strikes after next month’s midterm elections. Meanwhile, Tehran is reportedly preparing a more forceful response if attacked again, potentially targeting countries outside the Middle East, according to Reuters.

The Iran-backed Houthis in Yemen are showing no signs of slowing their attacks on Saudi Arabia. On Thursday, a drone struck a power distribution station serving the Prophet’s Mosque in Medina, according to Saudi officials, while the kingdom’s air defenses intercepted missiles in the southwest. The Saudi-backed Yemeni government retaliated Friday, hitting Houthi positions in Sanaa.

Saudi FDI takes wartime hit

Foreign investment into Saudi Arabia declined in the war’s first full quarter, with net inflows down nearly 20% from a year earlier to the lowest since 2024. The kingdom aims to attract $100 billion a year in foreign investment by 2030 — in the first half of 2026, it had about $11 billion in net FDI. Attracting outside capital is core to Saudi Arabia’s economic development plans, especially as the government seeks to boost private businesses and is adjusting spending as deficits mount. This year’s figures indicate the war has been a drag, unsurprisingly, making the long-term target harder to achieve.

Abu Dhabi-Dubai gap fills up

The 80-kilometer stretch between Abu Dhabi and Dubai — a barren expanse of farms, factories, warehouses, and not much else — is now drawing multibillion-dollar property projects. Aldar, the capital’s biggest developer, and Sharjah’s Arada formed a 15 billion dirham ($4.1 billion) partnership whose centerpiece is a villa and townhouse community in Seih Sdeirah, on the border between the two emirates. Arada is also buying three Yas Island plots in its first move into Abu Dhabi.

The new project joins others along the strip that may eventually form a megalopolis in the coming decades. Last year, AD Ports and a Dubai developer partnered to build a 2.47 billion dirham mixed-use community, including housing, hotels, golf courses, schools and, of course, a mall. Egyptian billionaire Naguib Sawiris is also planning a $10 billion project along the border of the two emirates.

UAE pushes water investment

The UAE is pushing governments and private financial institutions to drastically scale up investment in global water infrastructure, a senior government official told Semafor. Although he declined to disclose a specific fundraising target, Abdulla Balalaa, the country’s assistant minister of foreign affairs for energy and sustainability, said that a primary goal of a major UN-backed water summit taking place in Abu Dhabi in December will be to shrink what is currently a nearly $7 billion gap in global water security finance.

Despite attacks by Iran on desalination plants this year, the UAE hasn’t experienced a single day of water supply cuts, Balalaa said, in part due to investments it has made in AI-enabled water efficiency systems. But in general, water investment continues to be constrained by a lack of supportive regulation, especially in developing countries: “Water has always been under-prioritized, taken for granted, and held hostage to something else,” he said. “This requires a paradigm shift.”

— Tim McDonnell

Abu Dhabi hits back over Man City ruling

The fallout from Manchester City’s guilty verdict last week is threatening more than the club’s trophy cabinet: Billions in investment are now on the line. Emirati officials have reportedly warned the UK government that the ruling could reduce Abu Dhabi’s appetite for big commitments in Britain, according to Bloomberg. The UAE has committed about £30 billion ($39.7 billion) to the UK, with a London investment summit planned this month.

Manchester City was found to have inflated its finances by more than £900 million ($1.2 billion), a finding its Abu Dhabi owners plan to appeal. Its main sponsor, Etihad Airways, said it was considering legal action against the league, while club CEO Ferran Soriano said the case was “based on a single false accusation” that the owners secretly funneled money into the club through sponsors.

• Oct. 4: OPEC+ members are expected to keep output targets steady at a Sunday meeting.
• Oct. 5: S&P Global publishes September PMI data for Saudi Arabia, the UAE, Qatar, and Kuwait.
• Oct. 5-7: AI Everything Abu Dhabi runs at ADNEC, opening with a one-day Abu Dhabi AI Summit.
• Oct. 6: Jeddah hosts the Arabian Gulf Cup final at Alinma Stadium.
• Oct. 6-7: Oil traders gather in Fujairah for Gulf Intelligence’s Energy Markets Forum.