Dubai stock market hits 8-year high, outlook bright

The Dubai stock market hit an eight-year high on Thursday, driven by the strong performance of consumer-related and real estate stocks, expectations of new listings as well as strong economic outlook despite challenges to the global economy.

Analysts projected that the market would continue to perform strongly going forward on the back of high oil prices, growth in the Chinese economy and new public and private initial public offerings (IPOs) that are likely to be floated in the coming months.

The local market gained nearly 25 per cent since January 2023, surpassing the S&P 500 index and the MSCI All Country World Index, which increased by around 20 per cent and 16 per cent, respectively.

The Dubai Financial Market General Index (DFMGI) surpassed the 4,000 level on July 14, 2023 – its highest closing since December 2015. It reached a peak of 4,022 on Tuesday before the local market witnessed some profit-taking, pushing the index down to 3,986.36 at the close of the markets on Thursday. The markets will be closed on Friday to mark the beginning of the Islamic New Year.

Ahmed Negm, head of market research Mena at XS.com, said the Dubai stock market could stabilise after recording some price corrections while strong local fundamentals could help the main index return to the upside. “Traders could, however, remain cautious ahead of the Federal Reserve’s meeting in the middle of next week,” he said.

Vijay Valecha, chief investment officer, Century Financial, said the recent rally was driven by a strong macroeconomic outlook stemming from the uptick in real estate and tourism activity.

“New listings, particularly those of government and semi-government entities as well as private family-owned businesses going public, propelled overall momentum in the markets. As a result, the UAE recorded $3 billion listing proceeds in Q1 2023 – the third highest in the world,” he said.

Quoting sources, Reuters on Thursday reported that the Roads and Transport Authority, Dubai, is planning an initial public offering (IPO) of Dubai Taxi Corporation in December-January and has asked investment banks to pitch the roles.

“Russian crude shipments are already easing and the Opec+ is not increasing output any time soon. China is mulling over a support package to stimulate its economy. This bodes well for countries like the UAE which generate substantial oil revenues. Non-oil economic growth is also projected to increase due to the region’s economic diversification initiatives. Thus, the UAE’s stock market outlook, particularly that of the DFM, remains optimistic over the foreseeable future,” said Century Financial's chief investment officer.