UAE Stock Market Hits $1 Trillion Milestone As IPO Booms

Vijay Valecha,The Global Economics, November 19, 2024

UAE stock market growth was due to successful IPOs, increased foreign inflows, and strong corporate earnings.

The UAE stock market has reached a market capitalisation of $1 trillion, mainly due to IPOs and strong earnings. The second-largest economy in the Arab world continues to grow despite diversification attempts.

The market capitalization of the two markets makes the UAE market greater than that of Milan and Madrid. The UAE is more significant than most emerging markets, except China and India, but still overshadowed by the approximately $3 trillion Saudi Arabian Tadawul stock market.

The combined value of the UAE’s stock markets has achieved a significant milestone, with the Abu Dhabi Securities Exchange (ADX) contributing $801 billion and the Dubai Financial Market (DFM) contributing $206 billion. This growth was due to successful IPOs, increased foreign inflows, and strong corporate earnings.

The government’s push to increase liquidity and grow investor demand led to these listings in Dubai and Abu Dhabi. 100 companies are in ADX, and 68 are on the DFM.

Delivery Hero, a food delivery service in Germany, announced that it is taking advantage of the UAE listing boom by offering 15% of its UAE subsidiary Talabat on the Dubai Stock Exchange in the fourth quarter.

LuLu Group, the UAE’s biggest retailer, raised Dh6.32 billion in its successful IPOs, the most extensive listing in the country. The hypermarket chain set its share price at the upper end due to high investor demand.

Other companies listed in the UAE are Alef Education, which raised $515 million from its IPOs in Abu Dhabi; NMDC Energy, a unit of National Marine Dredging Company, which started trading on the ADX after raising $877 million; ADNH Catering, a unit of Abu Dhabi National Hotels, which raised Dh864 million through the sale of 40% stake.


DFM performed far better than GCC stock markers like Tadawul due to robust economic drivers and company financial performance. This momentum in the Emirates has the potential to continue for the upcoming year.

Vijay Valecha, CIO at Century Financial, stated that UAE raised $1.1 billion through IPO in the third quarter of 2024. Consequently, 69% of the GCC total IPO capital raised during the quarter came from the UAE. Saudi Arabia came in second place, raising $512 million, or 31% of the total for the region.

The listing trend will continue next year due to possible offerings from Alpha Data and Etihad Airways. It is anticipated that listings from shops, airlines, food delivery services, and IT service organisations.

According to the Ministry of Economy, the economy increased by 3.4% in the first quarter, with a GDP of Dh430 billion. During the quarter, the non-oil industry grew by 4%.

The positive outlook of the UAE stock market is due to strong economic fundamentals. Due to new listings and ongoing market reforms, the robust macroeconomic environment puts ADX and DFM in a solid position for long-term growth.  

The expanding technology industry, which has received increasing investments, also supports the economy and the financial markets. Earlier, Microsoft announced that it would invest $1.5 billion in G42, an AI and cloud-based firm in Abu Dhabi, to expand G42 internationally. Microsoft, BlackRock, Global Infrastructure Partners, and Abu Dhabi-based technology company MGX have also launched an AI infrastructure investment partnership that raised $100 billion to enhance AI in the future.

The blockchain and cryptocurrency solutions company Phoenix Group, based in Abu Dhabi, started trading on the ADE after a $370 million IPO. Space42, an AI-powered SpaceTech business based in the United Arab Emirates created following the merger of Bayanat and Yahsat, had its trading debut on the ADX.

The highest stocks on DFM are from Emirates NBD, Emaar Properties, Emaar Development, Dubai Electricity, and Water Authority, while for Abu Dhabi, it is International Holding Company, First Abu Dhabi Bank, e&, Multiply, Alpha Dhabi, and Aldar Properties.

Dubai has outperformed many stocks, including recently listed ones like Dubai Taxi Company, Salik, and Parkin, reaching all-time highs.

DFM performed far better than GCC stock markers like Tadawul due to robust economic drivers and company financial performance. This momentum in the Emirates has the potential to continue for the upcoming year.

Source

The Global Economics