Dubai equity benchmark set to rise 20% this year

Vijay Valecha, Khaleej Times, December 9, 2024

This year is turning out to be yet another magnificent one for Dubai stocks. The DFM index, which rallied by 22 per cent in 2023, is on track to close with another 20 per cent gain for 2024, data shows.

On a combined basis for both years, the index is on track to outperform its regional peers in terms of price appreciation and total returns. “Dubai’s ongoing economic boom can be primarily attributed to growth in its real estate assets and the rising Dubai population. While the former is visible in the form of the price performance of real estate stocks, the latter can be seen from the performance of top Dubai utility stocks,” said Vijay Valecha, chief investment officer, Century Financial.

Last month, seven out of the eight sectors recorded growth on the Dubai Financial Market General Index, Kamco Invest data showed. The overall index surge was mainly supported during the month due to the robust growth of the materials and real estate indices, which recorded 33.9 per cent and 14.5 per cent gain during the month, respectively. Total monthly volume rose 46.8 per cent last month to 4.8 billion shares vs. 3.3 billion shares in October, while monthly value traded increased by 46 per cent to Dh11.4 billion.

Unsurprisingly, the three stocks – Emaar Development, Salik and Emaar Properties — have contributed nearly 52 per cent of the index’s 20 per cent year-to-date (YTD) gains. Emaar Development, which has gained by 63 per cent on a YTD basis, has contributed the most to the index gains.

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The DFM index is currently trading near 4,830 levels. Its decade-high currently lies near the 5,400 range (12 per cent higher than the current index price). “Market breadthwise, for the index to sustain and even breach its previous decade’s highs, more upside participation needs to come from top banking names – Emirates NBD, DIB and Mashreq. Emirates NBD, which has gained by 20 per cent this year (lower than DIB and Mashreq YTD gains), must see more upside for the index to maintain and balance a stronger hold. It should be noted Emirates NBD, owing to its 10 per cent weightage in the index, exerts a considerable influence on the overall index and banking sector trends,” Valecha said.

Top Dubai utility stocks Dewa and Salik have rallied by 15 per cent and 80 per cent respectively so far this year. While Dewa seems to be lagging behind the gains amongst other Dubai utilities, the company and its stock prices are on a solid footing heading into 2025. The overall rise in Dubai residency population over the last two years bodes well for these utility stocks, Valecha said. “Launching a new residency and off-plan projects will translate into more demand for Dewa and Empower connections. Earnings-wise, the projected trends also point towards double-digit growth (> 20 per cent ) for the 2025 top-line revenue numbers for major utilities, including Sailk & Parkin. In the case of Dewa, the company has consistently reported a 4 per cent + growth rate in new customer additions quarterly. These trends further signify the growing role of utility company stocks in anchoring index gains,” Valecha said.

Source

Khaleej Times