Dubai Financial Market Set for 20% Surge in 2024

Vijay Valecha, The Finance World, December 10, 2024

Dubai’s equity benchmark, the Dubai Financial Market (DFM) index, is on track to register a remarkable 20% growth this year, continuing its stellar performance from 2023, when it rose by 22%. This surge positions the DFM index as a standout performer among its regional counterparts in terms of both price appreciation and total returns.

Vijay Valecha, Chief Investment Officer at Century Financial, attributed this growth to Dubai’s ongoing economic boom. He noted, “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.”

Strong Sectoral Growth

The upward momentum has been fueled by significant gains across key sectors. Data from Kamco Invest revealed that seven of the eight sectors on the DFM General Index posted growth last month. The materials sector led the way with a 33.9% rise, followed by a 14.5% increase in the real estate index.

Total trading volume surged by 46.8% in November, reaching 4.8 billion shares compared to 3.3 billion shares in October. The total trading value also rose by 46%, hitting Dh11.4 billion.

Emaar Development, Salik, and Emaar Properties have been instrumental in driving the index’s 20% year-to-date (YTD) gains, contributing nearly 52% of the growth. Among them, Emaar Development emerged as the top performer, with a YTD gain of 63%.

Market Outlook

The DFM index currently trades near 4,830 points, with its decade-high at approximately 5,400 points, representing a 12% upside potential. Valecha highlighted the need for stronger contributions from banking stocks, stating, “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, owing to its 10% weightage in the index, exerts a considerable influence on overall trends.”

Utility Stocks Leading the Way

Dubai’s top utility stocks have also played a critical role in this year’s market rally. Salik surged by an impressive 80%, while Dewa saw a steady 15% increase. Valecha noted that the rising Dubai residency population and ongoing off-plan projects are driving demand for utility connections, benefiting companies like Dewa and Empower.

“Earnings trends indicate double-digit growth (>20%) in top-line revenue for major utilities in 2025,” Valecha said. He also highlighted Dewa’s consistent quarterly growth rate of over 4% in new customer additions as a strong indicator of its robust performance heading into the new year.

Conclusion

As Dubai continues its economic expansion, the DFM index is poised to maintain its growth trajectory. With real estate and utility stocks anchoring this performance, coupled with potential gains from banking sectors, the market outlook for 2025 appears promising.

Source

The Finance World