AI-bu Dhabi
Abu Dhabi’s economic narrative has evolved beyond transformation into one of established global leadership at the intersection of artificial intelligence and energy. The emirate is uniquely positioned to harness its vast energy resources to meet the immense compute requirements of the AI revolution, effectively emerging as a foundational hub for the global digital economy.
This momentum is being driven by a powerful triad: world-class infrastructure, a growing concentration of talent, and the rapid maturation of its capital markets. The expansion of KEZAD’s industrial zones, through more than fifteen major international agreements, has cemented Abu Dhabi’s role as a critical trade super-connector between Asia and Africa. In parallel, landmark 2026 labour reforms have catalysed a strategic brain gain, leveraging merit-based recruitment and flexible employment frameworks to attract top-tier global engineering talent. These structural shifts are increasingly reflected in the Abu Dhabi Securities Exchange, where a wave of New Economy IPOs, particularly across GovTech and renewable energy, has created a deep and liquid access point for international investors seeking exposure to the region’s non-oil growth.
For long-term fixed income investors, Abu Dhabi stands out as a compelling high-grade opportunity within the emerging market universe. The sovereign maintains the highest credit ratings in the region (equalised with Qatar) and among EM peers (AA/Aa2), supported by an exceptional net foreign asset position estimated to exceed 250% of GDP. This formidable balance sheet provides a substantial buffer against oil price volatility and regional geopolitical risk, positioning sovereign debt as a relative safe-haven asset offering a meaningful yield premium over developed-market counterparts.
We also continue to identify attractive value in the bonds of leading state-owned entities, including Mubadala, TAQA and ADNOC. These national champions are central to the emirate’s diversification strategy and their securities frequently trade at attractive spreads despite exhibiting near-sovereign credit quality. At a time when fiscal deficits are expanding across much of the global economy, Abu Dhabi’s disciplined fiscal stance, characterised by projected 2026 surpluses of approximately 8% of GDP and a low debt-to-GDP ratio, underscored its undervalued quasi-sovereign bonds as a core allocation within our Fixed Income portfolios.
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