UAE bourses perform well in Q1 of 2022

The UAE capital market indices jumped during quarterly trading, with the Dubai Financial Market (DFM) recording its eighth consecutive rise, and on a parallel track, the Abu Dhabi Securities Exchange (ADX) index has emerged with the highest quarterly close for the first time.

According to market data, the DFM recorded profits of more than $7.08 billion whereas ADX market recorded a gain of $65.60 billion.

The DFM climbed 10.35% at the end of Q1 of 2022 rising 3,526 points, up from about 3,195 points at the end of December 2021. The Emirate’s banking sector registered a growth of 11.36% and Dubai Commercial Bank gained 14.71% percent, followed by Dubai Islamic Bank (14.68%) and GFH rose by 3.36%.

Market Capitalization

The DFM’s market capitalization stood at $118.65 billion at the end of March 2022 up from $111.74 billion at the end of 31 December 2021 earning profits of $7.11 billion.

The ADX gained 632 points, from 9319 points at the end of December 2021 to 9,951 points by March 2022, thus registering a growth of 17.23% on a quarterly basis.

This growth coincided with a 27.74% rise in Abu Dhabi Islamic Bank and followed by Abu Dhabi First Bank 24.87%, Abu Dhabi Commercial Bank 24.76%, Aldar Real Estate group 23.56% and among others.

Even the market capitalization of ADX stood at $490 billion at the end of Q1 of 2022, compared with $420 billion at the end of December 2021.

The increase in market capitalization was due to the Initial Public Offerings by companies like AD Ports, DEWA among others. With DFM planning to enlist 10 state-owned companies this year, the bourse will no doubt entice foreign individual and institutional investors to invest in the UAE markets.

Global IPOs Slowdown in Q1 of 2022

After record-high levels of global IPO activity in 2021, volatile market conditions have resulted in a significant slowdown during the first quarter of 2022.

The year started off strongly, continuing the momentum of Q4 2021, with January producing the strongest opening month in 21 years by proceeds.

However, by the second half of the quarter, worldwide stock market declines shifted the trajectory dramatically in the opposite direction, resulting in a significant drop in the overall activity. For Q1 of 2022, the global IPO market saw 321 deals raising $54.4 billion in proceeds, a decrease of 37% and 51% Y-O-Y respectively.

The sudden reversal in fortunes can be attributed to a range of issues, both emerging and residual. These include the rise in geopolitical tensions such as Russia-Ukraine war; stock market volatility; price correction in over-valued stocks from recent IPOs; growing concerns about a rise in the commodity and energy prices; impact of inflation and potential interest rate hikes; as well as the COVID-19 pandemic risk continuing to hold back a full global economic recovery.