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Is market turbulence a crisis or opportunity?

12 May 2025

 

Periods of market turbulence often provoke fear, hesitation and retreat. Yet history shows that such phases, while undeniably testing, also serve as fertile ground for innovation, repositioning and growth. For those with strategic foresight, disciplined risk management and a human-centric ethos, downturns can offer more than survival: they present an opportunity to thrive.

As an executive deeply involved in risk governance and financial innovation, I have long observed how resilient strategies emerge not despite adversity, but because of it. In this piece, I will reflect on how downturns can be transformed into turning points for both investors and entrepreneurs, drawing lessons from global markets as well as the unique dynamics of the UAE and broader Middle East.

Investment strategies in downturns: discipline over reaction

Downturns typically trigger indiscriminate sell-offs, creating mispriced assets and panic-driven exits. This emotional volatility, however, creates a landscape in which structured, forward-looking investment strategies can flourish.

For investors, the priority should be to reassess portfolios with a clear view on risk tolerance, time horizon and liquidity needs:

  • Asset rebalancing: Long-term investors may find it opportune to reallocate towards undervalued equities, high-quality fixed income, or inflation-resilient assets. Historical downturns, from the global financial crisis to the Covid-19 crash, have shown that disciplined dollar-cost averaging and rebalancing can significantly enhance long-term returns.
  • Alternative assets: Real assets, such as infrastructure or real estate investment trusts (REITs), and commodities can serve as hedges in volatile inflationary environments.
  • Private equity and venture capital: For sophisticated investors, downturns may offer entry points into private equity and venture capital at favourable valuations. Startups and scaleups often accept more reasonable terms in uncertain times, and historical data shows that some of the most successful venture capital (VC) vintages followed periods of market stress.

Risk mitigation, however, is essential:

  • Diversification remains the first line of defence.
  • Stress-testing portfolios for various macro scenarios, including stagflation, monetary tightening and geopolitical risk, should be standard practice.
  • Liquidity buffers must be maintained to manage redemptions or unforeseen personal financial needs.

In the UAE, where family offices and sovereign wealth funds play a significant role, we see a growing interest in regionally diversified portfolios, with a focus on sectors such as clean energy, logistics and digital infrastructure – sectors positioned to benefit from Vision 2030 and broader Gulf transformation agendas.

Entrepreneurship in adversity: the birthplace of bold ideas

While some consolidate, others create. Market downturns often spur a new generation of entrepreneurs who identify gaps exposed by the crisis. Historically, some of the most impactful companies – Airbnb, Uber, WhatsApp – were launched during or immediately following downturns.

In the UAE and broader Middle East, several dynamics favour venture creation during market resets:

  • Fintech and digital payments: Platforms such as Tabby and YAP have drawn regional and international funding by offering payment and banking solutions tailored to Gulf consumers. The regulatory support from the Abu Dhabi Global Market and Dubai International Financial Centre (DIFC) further accelerates fintech scale-up.
  • Healthtech and telemedicine: UAE-based Okadoc capitalised on post-pandemic shifts in healthcare delivery, showcasing how digital-first approaches can meet new regional demand.
  • Clean and renewable energy: The UAE’s Net Zero 2050 Strategy opens doors for ventures in solar, green hydrogen and smart grid optimisation. Public-private partnerships and accelerators such as Masdar enable innovation in sustainability.
  • AgriTech and food security: Startups such as Pure Harvest Smart Farms have demonstrated that even in resource-scarce environments, high-tech agriculture can scale successfully, addressing critical regional needs.
  • Logistics and e-commerce infrastructure: The exponential growth of e-commerce during Covid-19 created demand for smarter logistics solutions. Startups such as Fetchr and Trukker leveraged this need with tech-enabled delivery models.
  • Web3 and digital assets: Dubai’s VARA regulatory framework is a regional first, creating a clear and supportive environment for blockchain innovation and digital asset management, even amid global uncertainty in the sector.

These examples show that even under pressure, the ecosystem in the UAE supports entrepreneurship through:

  • Government support: Programmes across the UAE – such as Hub71 in Abu Dhabi or DIFC Innovation Hub in Dubai – continue to provide funding, mentorship and regulatory pathways.
  • Investor appetite: Well-articulated business models in fintech, sustainability, healthtech and logistics continue to attract funding.
  • Regional resilience: The Gulf’s relative macroeconomic stability, energy-backed liquidity and demographic growth offer a unique buffer and growth runway for new ventures.

However, launching a venture in a downturn is not without risk. Key mitigation strategies include:

  • Lean operations: Emphasising capital efficiency, iterative development and realistic runway expectations.
  • Market validation: Prioritising early market feedback over aggressive scaling.
  • Regulatory alignment: Ensuring the business is structured in accordance with evolving compliance and governance frameworks, particularly in regulated sectors like financial services.

Historically, some of the most impactful companies – Airbnb, Uber, WhatsApp – were launched during or immediately following downturns

Leadership at the crossroads: vision, culture and responsibility

Market downturns are not only tests of capital – they are tests of leadership. A true leader demonstrates the ability to remain composed amid noise, uphold governance while embracing calculated risk and never lose sight of the human dimension of business.

Visionary leadership in such times involves:

  • Cultural awareness: Understanding the national and organisational culture within which one operates is not a soft skill, but a strategic necessity. In the Middle East, this includes navigating regulatory nuance, relationship-driven business cultures and evolving expectations around environmental, social and governance (ESG).
  • Sustainability orientation: Downturns accelerate the shift toward long-term thinking. Investors and founders alike must align with ESG principles not as a checkbox, but as a pillar of long-term viability.
  • People-first mindset: Whether stewarding a portfolio or leading a new venture, the ability to care for, communicate with and empower people becomes the differentiator. Even in the most technologically advanced sectors, success is ultimately shaped by the people behind the systems.

A call to engage, not withdraw

Downturns are not the time to retreat into conservatism or wait for clarity that may never fully arrive. They are, instead, the ultimate environment to test one’s assumptions, refine one’s vision and act with conviction.

Whether deploying capital, designing ventures or steering institutions, leaders must adopt a dual lens: caution informed by risk and courage fuelled by purpose. For those willing to engage with complexity, lead with empathy and plan with resilience, downturns may not be crises at all – they may be catalysts.

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