PC: Reuters
Real estate and finance stocks drive Dubai’s rally; Gulf markets cautiously optimistic ahead of US Fed decision.
Dubai’s bourse jumped to a fresh near-decade high Monday, with the main DFMGI index increasing by 3.7 per cent to close at 5,010 points. Supportive performances in the real estate and finance sectors in particular by Emirates NBD and Emaar Properties largely powered the rally.
The increase comes ahead of the U.S. Federal Reserve’s interest rate decision, due later this week. The Fed is likely to lower its interest rates by 25 basis points during its meeting scheduled for December 17-18. The move will also give updated projections of the Fed’s monetary policy for 2025 and 2026. As most currencies in the Gulf, such as the UAE dirham, are pegged to the U.S. dollar, the Fed’s policies significantly affect the region’s financial landscape.
Key Drivers Behind Dubai’s Rally
Real estate heavyweight Emaar Properties (EMAR.DU) was the standout performer, soaring 14.7% to its highest level in nearly 17 years. The developer announced plans to declare dividends equivalent to 100% of its share capital for 2024 and beyond, amounting to 8.80 billion dirhams ($2.40 billion). In response, HSBC raised Emaar’s target price from 10.8 dirhams to 13.2 dirhams.
Dubai’s largest lender, Emirates NBD (ENBD.DU), also saw substantial gains, rising 8% on Monday.
Mixed Performance Across Gulf Markets
Other Gulf markets posted modest gains ahead of the anticipated Fed decision:
- Saudi Arabia: The benchmark index (.TASI) increased by 0.2%, mainly due to an increase in healthcare, utilities, and IT stocks. Dr. Soliman Abdel Kader Fakeeh Hospital (4017.SE) was up by 6%, and Perfect Presentation (7204.SE), a leading provider of ICT solutions, went up 2% following its successful bid for the project by the Ministry of Investment.
- Abu Dhabi: The index (.FTFADGI) was up 0.2% today, supported by a 1.1% increase in Alpha Dhabi Holding (ALPHADHABI.AD) and a 4.9% increase in Aldar Properties (ALDAR.AD).
- Qatar: The Qatari index (.QSI) rose 0.1%, advancing in most sectors. Industrials Qatar (IQCD.QA) and Doha Bank (DOBK.QA) increased by 0.5%. Doha Bank said it is set to sign a memorandum of understanding with Al Khaleej Takaful Insurance Co (KINS.QA) for the takeover of Sharq Insurance.
While Dubai led the regional rally, Gulf markets remained cautiously optimistic as investors awaited clearer signals on monetary policy from the U.S. Fed. The probable rate cut could influence liquidity flows and borrowing costs across the Gulf, which is well tied to the dollar’s trajectory.
Real estate and financial stocks are the ones that have emerged as key growth drivers for Dubai to finish 2024 strongly, but Federal Reserve’s upcoming decision will shape regional market dynamics in the months to come.
