Report Summary

Global markets are experiencing heightened volatility following news of a possible investigation into Federal Reserve Chair Jerome Powell, coupled with geopolitical frictions involving Iran. Gold and silver spot prices jumped, with gold reaching 4600 and likely headed for 4800 in the coming months. Within the UAE, caution prevails as local indices remain under pressure. Only modest portfolio exposure is suggested, focusing on selective opportunities. Buying prospects lie in precious metals diversification and, on technical breakouts, potentially in e& (Etisalat). Overall, the market environment remains uncertain, with short-term volatility set to persist.

UAE Markets

Navigating 2026: The UAE Telecommunication Sector Outlook

Growth Driven by 5G and AI: The sector is projected to reach a market size of approximately $11.76 billion in 2025, with growth fueled by the rapid expansion of 5G Standalone (SA) networks and the integration of AI for predictive maintenance and automated customer service.
e& (Etisalat) Bullish Momentum: We set a price target for e& at AED 22.00–23.00, contingent on the stock successfully breaking above the critical resistance level of AED 19.50. This optimism is supported by a 60.7% increase in consolidated net profit reported in H1 2025 and an expanding international subscriber base of over 200 million.
du’s Valuation and Risks: While du has a price target of AED 12.00 (with some fair value estimates around AED 11.37), it is perceived as a higher-risk play compared to Etisalat. This is largely due to its high Price-to-Earnings (P/E) ratio of approximately 16.5x, which is considered expensive relative to its fair ratio of 12.9x.
Strategic Revenue Diversification: Both operators are shifting from traditional "Telco" to "Techco" models. Etisalat is seeing massive growth in its fintech arm (e& money), while du is aggressively expanding its ICT and cloud business through partnerships, such as its AED 2 billion data center venture with Microsoft.
Market Saturation Challenges: With internet penetration at 99% and mobile penetration at 98%, organic subscriber growth has plateaued. Competition is now focused on "value-added services" like 5G network slicing for industries and premium entertainment bundles to increase Average Revenue Per User (ARPU).

Global Markets

A Fight for Independence: Chair Powell claimed that a recent government probe into the Fed’s office renovations is actually an attempt to bully him into cutting rates. Because the Fed is supposed to be independent, this political drama has made investors worry that future decisions about the economy will be based on politics rather than data.
Stocks Slide on the News: As soon as the news broke, the stock market reacted by dropping. Investors hate uncertainty, and the idea of the Fed being at war with the government makes it hard to predict what will happen with interest rates. Many people who were planning to buy stocks are now waiting on the sidelines to see how this power struggle ends.
Gold and "Safe" Assets Rise: With things looking shaky at home, people are moving their money into "safe havens" like gold. This fear is made worse by global conflicts—specifically recent military tensions in Venezuela and Iran. When the world feels unstable, prices for things like gold tend to skyrocket, which we are seeing happen right now.
A Rollercoaster for Investors: The combination of political drama at the Fed and wars abroad has caused market volatility to spike. This means stock prices are swinging up and down much faster than usual. For the average person, this makes investing feel much riskier, as the "safety net" of a stable government and a predictable Fed feels like it’s slipping away.

News

Powell Investigation: Federal Reserve Chair Jerome Powell has pledged to resist a Department of Justice subpoena related to Fed headquarters renovations, characterizing the criminal investigation as a dramatic escalation of political pressure from the Trump administration.

Investment Recommendations

Bank of Sharjah (BOS): Buy above 1.30, target 1.40, stoploss below1.28

Financial Calendar

Mon 12 Jan

NFIB Small Business Optimism (Dec) – 15:00

Tue 13 Jan

CPI (Dec) – 17:30
Core CPI (Dec) – 17:30
New Home Sales (Oct) – 19:00
Federal Budget Balance (Dec) – 23:00

Wed 14 Jan

MBA Mortgage Applications – 16:00
PPI (Dec) – 17:30
Core PPI (Dec) – 17:30
Retail Sales (Dec) – 17:30
Retail Sales ex Auto (Dec) – 17:30

Thu 15 Jan

Existing Home Sales (Dec) – 19:00