Dubai has emerged as one of the best performing stock markets globally in 2013, according to Global Equity International, a global consultancy that advises business leaders. By the end of November, the Dubai benchmark stock index had increased by 82%. Abu Dhabi appreciated by 46% during the same period.
The Dubai Financial Market started the year strongly by appreciating 16 per cent in the month of January and since then has rallied steadily, with trading volumes increasing as the year progressed. During late August and early September when the US announced that it was considering a military intervention in Syria, it witnessed more than 15 per cent decline, which it recovered in due course.
Overseas investors have driven the rally in UAE markets, specifically Dubai. Until before the Expo 2020 announcement last week, foreign institutional investors purchased UAE shares valued at $718.9 million. During the same period in 2012, their share was worth $202.9 million.
Dubai’s market performance has been partly due to the rebound in the Dubai economy and the increase in business confidence levels during the past one to two years. While the real estate sector which is the bulwark of the economy is booming, the tourism sector has also kept growing. The increase in the Dubai stocks has been broad-based but is tilted towards the small cap names, some of which have more than doubled in value. Some of the blue-chips such as Emaar Properties, Air Arabia and Emirates NBD are up between 68% and 85%.
Besides fundamentals, few catalysts worked in favor of UAE’s markets. These include MSCI’s decision to move UAE to emerging market category from its existing frontier category, improvement in corporate earnings, upgrade in terms of corporate ratings and news of a merger of the two markets in the works — all of which were topped by Dubai’s Expo 2020 win, which will have a long-term effect on almost all sectors. The regulator, Security and Commodities Authority’s initiatives on mutual funds and margin lending law also contributed to the positive sentiment of the markets.