Markets

Dubai index falls from 10-year peak but remains bullish

December 18, 2024, 4:55 PM

Dubai's equity benchmark is up 24 percent in 2024, making it among the top performers globally this year

Investors book profits from gains
Equity benchmark up 24%
Bellwether Emaar’s slight decline

Dubai’s index fell on Wednesday, easing from this week’s 10-year peak, as investors booked some profits from recent gains.

Its longer-term outlook remains bullish according to analysts.

The emirate’s equity benchmark is up 24 percent in 2024, making it among the top performers globally this year.

“From an economic growth perspective, Dubai merits that level of return,” said Akber Khan, acting chief executive officer of Al Rayan Investment in Doha.

“Some investors wonder whether the Dubai rally has run too far, but we remain confident about the continued strength of the emirate’s economy,” he said.

“Several excellent stock investment opportunities remain, with the three key sectors – trade, real estate and tourism – still firing on all cylinders.”

Other Gulf stock indexes have been more muted, with neighbouring Abu Dhabi down 3 percent and Saudi Arabia 0.7 percent lower in 2024, while the US S&P 500 Index is up 27.5 percent.

Emaar Properties, Dubai’s bellwether stock, fell 1.2 percent to AED12.50 on Wednesday, trimming its gains this week to 31 percent and easing from a 16-year high on Tuesday.

The stock soared after Emaar said it would pay a dividend of AED1 per share for 2024 and for the “following few years”. Based on Wednesday’s closing price, such an annual payout would provide a dividend yield of 8 percent, according to AGBI calculations.

Emaar’s share price has increased six-fold from a 2020 low of about AED2.10. Prior to the global financial crisis, investors considered AED10 as the floor for Emaar’s stock, but Dubai’s ensuing debt crisis and property market crash sent it tumbling.

Aside from a six-month period in 2014, Emaar’s shares remained below this landmark level until this week. The stock hit an all-time peak of just above AED25 in early 2005.

Emaar’s nine-month profit rose 3.5 percent year on year to AED8.52 billion. Its profit would have been higher but for a nine-fold increase in its tax expenses following the introduction of corporate tax in the UAE.

Dubai’s index fell 0.6 percent to 5,051 points on Wednesday, easing from Tuesday’s 10-year high as some investors cashed in gains. The benchmark has nearly tripled from an early 2020 low.

Emirates NBD fell 3.8 percent, although it remains up 18 percent in 2024. Emaar Development, 80 percent owned by parent Emaar Properties, declined 4.5 percent and telecom operator Du slipped 1.5 percent.