Foreign investors drive DFM boom as Dubai targets top global finance hub spot

Dubai: Foreign investor participation on the Dubai Financial Market (DFM) has reached record levels, playing a critical role in Dubai’s continued rise as a global financial centre, according to a new report by HSBC.

 The study, released at the 2025 Capital Market Summit and titled Strategy to Scale: Dubai’s Blueprint for Capital Market Growth, highlights that 85% of all new investors on the DFM in 2024 were foreign, underscoring a significant shift in the market's investor base.

This high level of foreign engagement reflects Dubai’s increasing appeal to international capital and marks a pivotal moment in its efforts to establish itself among the world’s top four financial hubs.

According to HSBC, foreign investors were not only registering in large numbers but also contributing significantly to trading activity — making up half of all trades on DFM by the end of 2024. This level of activity signals growing confidence from global investors in the stability and growth potential of Dubai’s capital markets.

Why the overseas rush?

The report attributes this trend to a combination of broad-based economic reforms, improved market infrastructure, and increasing opportunities for cross-border capital flows. It also points to the expanding internationalisation of Dubai’s equity markets as a key driver behind the influx of institutional capital from regions including Asia, Europe, and North America.

Between 2016 and 2024, the DFM delivered an annualised return of 4.9% in US dollar terms — significantly outperforming the broader MSCI Emerging Markets Index, which returned 2.8% over the same period. This performance, coupled with new listings and a growing number of IPOs, has made the market increasingly attractive to global investors seeking access to high-growth, emerging financial centres.

In parallel, the Dubai International Financial Centre (DIFC) saw a 16% year-on-year increase in the number of wealth and asset managers operating in the free zone, rising to 410 firms. Notably, 75 hedge funds are now active in the DIFC, with 48 of them managing assets in excess of $1 billion. This deepening institutional presence reflects the increasing complexity and depth of Dubai’s investment ecosystem.

Internationalisation of investor base

Dubai also accounted for 2.2% of global IPO volumes in 2024 and hosted the largest tech IPO of the year, further enhancing its visibility on the global investment map.

HSBC’s report concludes that the transformation underway in Dubai’s capital markets is being driven in large part by the internationalisation of its investor base. The shift is not only reshaping market dynamics but also helping to position Dubai as a key destination for foreign capital, supported by growing trust in its regulatory frameworks, infrastructure, and long-term economic vision.