UAE markets defy global downtrend amid strong economic performance

UAE markets defy global downtrend amid strong economic performance

Despite a global downturn in the equity market led by hawkish Federal Reserve sentiments, the United Arab Emirates (UAE) financial markets bucked the trend in August 2023, according to Kamco Invest's GCC Markets Monthly report. The MSCI World Index and MSCI GCC Index both saw declines of 3.6% and 3.8% respectively, while the DFM General Index in Dubai and the FTSE ADX index both recorded gains.

This positive performance in the UAE comes amid an accelerated economic growth supported by robust tourism numbers and a thriving real estate market. The UAE's non-oil foreign trade reached a record $337.6 billion during the first half of 2023, marking a 14.4% year-on-year growth rate, indicating successful diversification efforts away from hydrocarbon exports.

The DFM General Index witnessed its fifth consecutive monthly gain, closing August 2023 at 4,082.87 points, a rise of 0.6%. The Consumer Staples Index led with a 7.4% growth, followed by the Industrial index at 4.5%. Trading activity in the DFM declined during August, with total volume traded falling by 41.3% to reach 5.3 billion shares.

In contrast to global trends, Dubai's economy experienced strong growth in 2023, recording a 2.8% year-on-year increase in Q1-2023, reaching Dh111.3 billion ($30.3 billion). This robust performance was attributed to strong fundamentals, sustainability, and resilience within the city's economy.

The FTSE ADX index also saw a rise of 0.2% during August 2023, closing at 9,810.2 points and marking its third consecutive monthly gain. The Healthcare index led with a substantial growth of 19.3%, primarily due to Burjeel Holding's share price growth of 27.5%.

Despite these gains, trading activity saw an increase month-on-month for the second consecutive month during August-2023 with total volume of shares traded rising by 4.1% to reach 5.4 billion as compared to July-2023.

The UAE's robust economic performance is set to continue with UBS forecasting an expansion of 3.5% in 2023 and 3.9% in 2024 driven by strong demand for the Emirates' hydrocarbon exports and energy investments.

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