This year is proving to be another stellar year for Dubai stocks. The DFM index, which surged by 22 percent in 2023, is poised to end 2024 with another 20 percent gain, according to data. Over the two years combined, the index is set to outperform its regional counterparts in terms of price appreciation and total returns.
"Dubai's ongoing economic boom is largely driven by the growth in its real estate sector and the increasing population. While the former is evident in the performance of real estate stocks, the latter is reflected in the performance of top Dubai utility stocks," said Vijay Valecha, Chief Investment Officer at Century Financial.
Last month, seven out of eight sectors recorded growth on the Dubai Financial Market General Index, according to Kamco Invest data. The overall index surge was primarily supported by the robust growth in the materials and real estate indices, which saw gains of 33.9 percent and 14.5 percent, respectively. Total monthly volume increased by 46.8 percent to 4.8 billion shares compared to 3.3 billion shares in October, while monthly value traded rose by 46 percent to Dh11.4 billion.
Notably, three stocks – Emaar Development, Salik, and Emaar Properties – have contributed nearly 52 percent of the index's 20 percent year-to-date (YTD) gains. Emaar Development, with a YTD gain of 63 percent, has been the biggest contributor to the index's gains.
The DFM index is currently trading near 4,830 levels, with its decade-high near the 5,400 range, which is 12 percent higher than the current index price. "For the index to sustain and surpass its previous decade's highs, more participation from top banking names like Emirates NBD, DIB, and Mashreq is needed. Emirates NBD, which has gained 20 percent this year, must see further upside to maintain and balance a stronger hold. Given its 10 percent weightage in the index, Emirates NBD significantly influences the overall index and banking sector trends," Valecha noted.
Top Dubai utility stocks Dewa and Salik have rallied by 15 percent and 80 percent, respectively, so far this year. While Dewa appears to be lagging in gains compared to other utilities, the company and its stock are on a solid footing heading into 2025. The increase in Dubai's residency population over the past two years is favorable for these utility stocks, according to Valecha. "The launch of new residency and off-plan projects will drive more demand for Dewa and Empower connections. Earnings-wise, major utilities, including Sailk & Parkin, are projected to see double-digit growth (> 20 percent) in top-line revenue for 2025. For Dewa, the company has consistently reported a 4 percent+ growth rate in new customer additions quarterly. These trends underscore the growing importance of utility company stocks in driving index gains," Valecha added.
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