In 2024, can investors expect more of same from UAE and Gulf stock markets?
Rush of first-time investors on DFM, ADX recasts market dynamics
In the dynamic landscape of GCC stock markets, 2023 showcased noteworthy performances, reflecting the region's resilience amid global challenges. Let's zoom in on key developments and trends that defined the year across major stock exchanges in the GCC.
DFM's remarkable rally
The Dubai Financial Market emerged as a global frontrunner, boasting an impressive 21.8 per cent return for 2023. This stellar performance positioned it among the best-performing stock markets globally, a testament to the robustness of Dubai's real estate and banking sectors. Emaar Properties, a heavyweight developer, surged 35.2 per cent, while Emirates NDB Bank rewarded investors with a gain of 33.1 per cent.
Geopolitical volatility and market resilience
Despite geopolitical uncertainties stemming from conflicts in Ukraine and global interest rate hikes, the first-half of 2023 witnessed strong growth on the Dubai index. Profit-taking occurred during summer, but the market demonstrated resilience, rebounding decisively towards December's close. Healthy corporate earnings and robust cash returns played pivotal roles in sustaining market confidence.
Record-breaking NINs
The surge of IPOs in the UAE highlights the exceptional engagement of retail investors. They have actively voiced their desire to partake in the remarkable transformations and opportunities indicated by capital markets.
Brokerage firms at the DFM opened an impressive 57,054 new investor accounts in 2023, a remarkable 12.5 per cent increase. This was driven by strong market momentum, especially following the announcement of the listing of government and semi-government companies.
December alone witnessed a notable year-on-year spike of 184 per cent, with 6,088 new accounts opened, fuelled in part by high demand for the Dubai Taxi Corporation IPO.
The new investor accounts enhances the strength of Dubai's Financial Market, introducing the potential for increased liquidity and trading activities. Brokerage firms in the DFM executed over 3.83 million transactions in 2023, marking a substantial 32.7 per cent annual increase.
ADX's challenges
The Abu Dhabi Securities Exchange (ADX) recorded its first annual drop since 2020 with a 6.2 per cent decline. Weakness in the real estate and utilities sectors, along with fluctuating oil prices, contributed to the downturn. Leading component First Abu Dhabi Bank witnessed an 18.4 per cent decline in share price, marking the second consecutive year of setbacks for the largest lender by assets.
GCC markets: A mixed bag
The GCC equity markets concluded the year on a predominantly bullish trajectory, reflecting a broader economic resurgence in the region. The GCC-wide index achieved a closing point of 714.69, recording a gain of 3.7 per cent.
Saudi Arabia's Tadawul stock exchange, the largest in the Arab world, concluded 2023 with a remarkable 14.2 per cent increase. The Qatar Stock Exchange recorded a modest gain of 1.4 per cent for 2023, while Bahrain experienced a 4 per cent uptick. In contrast, Oman's index closed 7.1 per cent lower, and Kuwait's bourse a decline of 6.5 per cent.
A prudent approach
In summary, the GCC stock markets experienced a dynamic 2023 marked by impressive rallies, increased investor participation, and a blend of challenges and triumphs across exchanges. As the region positions itself for the future, the showcased resilience amid global uncertainties points to a promising outlook for investors in 2024.
Forecasts indicate a robust growth trajectory for GCC stock markets, particularly in the UAE and Saudi Arabia, supported by strong macroeconomic fundamentals, a dynamic investment landscape, decreasing global inflationary pressures, and expectations of heightened rate cuts.
Anticipated economic expansion, especially in the non-oil sector, is set to gather momentum, driven by significant government spending that will enhance market stability.
A continuous influx of IPOs is expected, contributing to the expansion and diversification of the markets. However, investors must approach these optimistic projections with caution, stay vigilant as markets evolve, and adapt strategies accordingly.