The Dubai Financial Market (DFM) General Index is poised to record an impressive 20% growth for 2024, building on its stellar 22% rally in 2023. This two-year combined performance cements Dubai’s equity benchmark as a standout in the region, outpacing its peers in both price appreciation and total returns.
Driving Factors Behind the Boom
Dubai’s ongoing economic expansion is fueled by a robust real estate market and a growing population. According to Vijay Valecha, Chief Investment Officer at Century Financial, “The surge in real estate assets and utility stocks reflects Dubai’s economic dynamism. Real estate price performance and population growth continue to drive market gains.”
Recent data from Kamco Invest reveals growth in seven of eight sectors on the DFM index last month. Real estate and materials indices led the charge with monthly gains of 14.5% and 33.9%, respectively. Monthly trading volumes jumped by 46.8% to 4.8 billion shares, with the traded value surging 46% to AED 11.4 billion.
Real Estate and Utility Stocks Take Center Stage
Emaar Development, Salik, and Emaar Properties have been pivotal contributors, accounting for 52% of the index’s 20% year-to-date (YTD) gains. Emaar Development, in particular, has soared 63% YTD, leading the charge.
Utility stocks like Salik and DEWA have also shown remarkable performance, with Salik rallying by 80% and DEWA posting a 15% gain this year. Valecha noted that the sustained rise in Dubai’s population and the launch of new residency and off-plan projects are expected to further bolster demand for utility services, translating into higher earnings. DEWA, for instance, has reported consistent quarterly growth of over 4% in customer additions, setting the stage for double-digit revenue growth in 2025.
Banking Sector and Decade-High Prospects
The DFM index currently hovers around 4,830, with its decade-high of 5,400 within reach. For the index to breach this milestone, stronger contributions are needed from key banking players like Emirates NBD, Dubai Islamic Bank (DIB), and Mashreq. Emirates NBD, which carries a significant 10% weightage in the index, has recorded a 20% gain this year but must accelerate its growth to sustain momentum, Valecha emphasized.
Outlook for 2025
Dubai’s economic growth trajectory remains promising, with real estate and utilities positioned as key drivers of sustained equity market gains. The growing population, coupled with strategic off-plan developments, underpins a bullish outlook for the DFM index and its constituents heading into 2025.
Investors and market participants continue to watch closely as Dubai cements its position as a regional leader in equity market performance.
Source: Khaleej Times
