DFM: The Heartbeat of Dubai’s Stock Exchange

The Dubai Financial Market stands at the forefront of the UAE’s financial ecosystem, moulding Dubai into a thriving hub for regional and international investors. DFM steered a revolution in business financing since its inception in March 2000, thereby creating a platform connecting companies and investors in one of the world’s fastest-growing financial centers. DFM remains a key piece in the emirate’s strategy to become a global finance hub as Dubai stock exchange continues to evolve.

In 2006, DFM took one landmark move: it transformed from a fully government-owned firm to that of a public joint-stock company. On its initial public offering, there was 118 times oversubscription, wherein 20% of the shares were sold to the public, while the remaining 80% was kept by Borse Dubai, a company owned by the government of Dubai. Such a transformation helped DFM position itself as a competitive entity in the global financial market.

The case of DFM is however unique compared to its sister exchanges, ADX and NASDAQ Dubai. While ADX is mostly dominated by lists from UAE companies and NASDAQ Dubai has stock trade fame worldwide, DFM works on the growth of companies in the MENA region. Its listings consist of major firms from countries such as Kuwait, Bahrain, Oman, Sudan, and many more – a great expansion into other investor pools. DFM is presented as a free-zone business environment where foreign investors and companies can perform ownership shares without any limitations. Since the policy is open, DFM is an attractive destination for global investors aiming to tap the rising economies of the GCC and broader MENA region.

DFM lists companies belonging to different sectors including banking, real estate, telecommunication, consumer staples, and transportation. Some of the major companies listed in DFM are:

• Emaar Properties – the region’s biggest real estate developer company
• Dubai Islamic Bank (DIB) – one of the world’s first Islamic finance institutions
• Air Arabia – a low-cost airline to fly all passengers going to from or through the MENA region
• Emirates NBD – one of the biggest banking groups in the Middle East.

Others available sectors within the DFM are: the insurance sector, the telecommunications sector, the financial services sector, and the consumer goods sector, and the list goes on to bring in more investors from across industries.

DFM was a booming firm during the early 2000s, especially in 2004 and 2005, as traded shares volume increased multifold. Unfortunately, this boom reversed in 2005–2006 when share prices declined by 60% and concurrently matched declines seen in other Gulf stock markets.

The global financial crisis in 2008 also caused significant setbacks in DFM in which revenue and net profit declined substantially. DFM’s net profit for 2007 managed to reach as high as AED 1.44 billion, but by 2010 it had dropped drastically to AED 79 million. However, the market proved resilient and came back strongly in the years of 2013. DFM’s profits grew by 166.3% in 2014, amounting to AED 759 million.

Despite fluctuations of the market, this exchange has made strides in expanding and accepting international investors which have stabilized and grown their list of companies.

Dubai Financial Market forms a key part of Dubai’s strategy in becoming the financial center for the world. It boasts a robust regulatory framework and an open market structure in addition to an impressive portfolio of listed companies, making it very significant for both businesses and investors.