Chart of the week: UAE stock passes $1 trillion mark

Flurry of listings in Dubai and Abu Dhabi in the past two years has boosted stock markets

UAE stock markets have hit $1 trillion in market capitalisation, primarily driven by initial public offerings as well as strong earnings, as the Arab world’s second-largest economy continues to grow amid diversification efforts.

The total market capitalisation of the two bourses that make the UAE market is bigger than Milan or Madrid, according to data compiled by Bloomberg. While dwarfed by the nearly $3 trillion Saudi Arabian Tadawul stock market, the UAE is larger than most emerging markets, barring a few like India and China, the data shows.

“The combined value of the UAE's stock markets has reached the significant milestone, with the Abu Dhabi Securities Exchange (ADX) contributing $801 billion and the Dubai Financial Market (DFM) adding $206 billion to this achievement,” George Pavel, general manager at brokerage firm Naga.com Middle East, said. “This growth has been driven by successful IPO activities, increased foreign investment inflows, and notably, strong corporate earnings across key sectors.”

There has been a flurry of listings in Dubai and Abu Dhabi in the past two years on the back of a push from the government to boost liquidity as well as growing investor demand. There are 100 companies listed on the ADX, while on DFM it is 68, according to data provided by the two bourses on Monday.

The strong performance of the UAE's economy amid the expansion of its non-oil sectors as well as investments in technology are also supporting stock markets.

In September, the UAE Central Bank revised its 2024 gross domestic product growth forecast to 4 per cent from the previous estimate of 3.9 per cent in June.

Earlier this year, Microsoft announced a $1.5 billion investment in Abu Dhabi artificial intelligence and cloud company G42 to help it boost G42's global expansion plans.

Abu Dhabi-based technology company MGX, BlackRock, Microsoft and Global Infrastructure Partners have also launched an artificial intelligence infrastructure investment partnership that aims to gather up to $100 billion to enhance the future of AI.

There have also been the listing of technology focused companies including Abu Dhabi-based blockchain and crypto solutions company Phoenix Group, which began trading on the Abu Dhabi Securities Exchange in December following a $370 million IPO.

Strong earnings reported by banks, property developers and other companies have also been boosting the UAE bourse's performance.