The Dubai Financial Market (DFM) is one of three stock exchanges in the UAE alongside the Abu Dhabi Securities Exchange and Nasdaq Dubai. The first two are mostly made up of UAE companies, while the latter was created for trading international stocks. This investing tutorial explains listing requirements and rules, trading tips, the top brokers and more.
Dubai Financial Market Background
The Government of Dubai owns 79.63% of the Dubai Financial Market through Borse Dubai Limited. The DFM conducts business in full compliance with the Islamic Sharia laws and is regulated by the Securities and Commodities Authority. In terms of capitalization, which is the total value of all of the shares of all of the securities traded on the Dubai Financial Market, the exchange comes in at around $119 billion USD.
Importantly, the DFM is a major stock market in the region, attracting local and global investors. Traders can speculate on leading real-estate companies, financial services providers, plus telecommunications.
A Brief History
The Dubai Financial Market Company (DFM PJSC) was founded on the 26th of March 2000. It was created as a public institution with an independent legal entity via the Government of Dubai and operated this way for six years.
Up until November 2006, the Dubai Financial Market was fully owned by the Government of Dubai, but at this point, it turned into a public shareholding company through an IPO and was divided into 8 billion shares. This led to 20% of shares (equating to 1.6 billion shares) going to the public and 80% being subscribed by Borse Dubai which the Dubai government owns. The public offering received unprecedented demand with subscriptions coming to AED 201 billion, meaning that DFM’s IPO was oversubscribed by 118 times.
In 2007, the Dubai Financial Market became the first regional exchange to be publicly listed, and in 2010, the Dubai Financial Market consolidated operations with Nasdaq Dubai. This means that investors can now access listed securities for both DFM and Nasdaq with just one Investor Number.
In 2013, the United Arab Emirates was upgraded to Emerging Market Status by MSCI and some stocks were included in the MSCI Emerging Markets Index in May 2014. In 2015, the Dubai Financial Market redesigned and launched an application called DFM Market Watch, allowing traders to check investments and markets more seamlessly.
Today, the number of listings comes to 66 companies, around three-quarters of which are in the financial (60.7%) and real estate (17.1%) sectors, with other firms in telecommunications, transportation, and industrials, among others.
Most of these companies are operating within the UAE, but the market is receiving more interest from outside investors and foreign ownership is on the rise since 2019. The majority of foreign companies listed on the Dubai Financial Market are from the MENA region, including countries such as Bahrain, Sudan, Kuwait and Oman.
There has not been an IPO listed on the DFM since the year 2017, but the DFM is continuously trying to bring in local companies and encouraging them to list there rather than abroad. Efforts include letting companies in Dubai’s free zones list and letting family companies list.
How Does The Dubai Financial Market Work
The Dubai Financial Market was established with the goal of offering securities trading services. With Dubai being a financial hub, the DFM has seen much success since it was established.
The stock exchange is currently open to investors of any nationality based in any country. In addition, any individual or institution can apply for an Investor Number (NIN) with the Dubai CSD.
The DFM takes several measures to prevent unfair treatment of investors by regulating trading activity on securities. Therefore, the prices of the securities on DFM are determined by supply and demand, rather than by an individual entity.
Stakeholders are given all relevant statistics and facts about securities in the form of reports. This is to ensure that investors have all of the information that is necessary to make informed decisions.
In order for the shares of a company to be traded on the DFM, there are specific listing requirements and rules that must be met. Firms must provide a description of their operations and company history. Importantly, the performance of the company must be strong if they are to attract investors looking to buy shares. If the performance of the company is deemed to be good enough, then a certain number of shares will be made public.
Listed companies on the Dubai Financial Market will also be required to maintain either their market value or share turnover higher than a level determined by DFM. The company is at risk of being delisted if this requirement is not met.
The Dubai Financial Market General Index
The DFM General Index is a tool that traders can use to see how the market is performing. This means that investors do not have to look through all 66 stock charts for every company listed. This index tracks the general market performance for the entirety of the DFM.
In terms of performance in recent years, the DFM General Index had its worst year in more than a decade in 2018 with a loss of nearly 25%. This rose again the following year by around 10%. The current outlook remains uncertain in the wake of Covid-19 and the Russia-Ukraine war.
Despite the above, the DFM has one of the most steady growth rates in the world. During the 2008 financial crisis, most companies were experiencing decreases in performance and growth, and for many companies, this has remained the same ever since. And unsurprisingly, when companies are performing poorly, this tends to have a negative effect on the financial market of the country they are listed in.
However, this hasn’t applied to the Dubai Financial Market, which has seen the number of traded shares routinely increase since it was conceived in 2000. Since its launch, the exchange has moved from having only 11 companies listed to the 66 that it has now.
How To Invest In The Dubai Financial Market
Investing in the DFM is straightforward. The stock exchange makes specific efforts to ensure the process is efficient for all investors, including through the development of a Dubai Financial Market app, which allows traders to monitor their investments.
To get started, individuals need to open a trading account with a broker who is registered with the Dubai Financial Market. They also need to obtain a Dubai Financial Market Investor Number.
As is the case with any kind of stock trading, it is wise to look into the company and sector that you are investing in and be aware of the level of risk that you are willing to take prior to taking a position. See our stock trading guide for strategy tips.
Final Word On Trading The Dubai Financial Market
Since its conception, the Dubai Financial Market has been one of the best-performing exchanges in the United Arab Emirates. It has seen fairly steady growth since it was established and was able to maintain relative success even during the global financial crisis of 2008. See our list of DFM trading brokers to start investing today.
What Is The Timezone For The Dubai Financial Market?
The Dubai Financial Market uses the Asia/Dubai timezone, also known as Gulf Standard Time. Currently, this timezone is GMT+04:00 and uses the abbreviation +04. This timezone does not follow Daylight Saving Time.
What Currency Is Used In The Dubai Financial Market?
The Dubai Financial Market trades in Emirati Dirhams, using the currency code AED. The symbol for this currency is د.إ.
What Are The Dubai Financial Market Trading Hours?
The Dubai Financial Market is open Monday – Friday from 10:00 until 14:45 Gulf Standard Time (GMT+04:00).
Who Owns The Dubai Financial Market?
Until 2006, the DFM was fully owned by the Government of Dubai, but after this, it was turned into a public joint-stock company through an IPO. From this point onwards, 20% of the shares were sold to the public and 80% were subscribed by Borse Dubai, which is owned by the Government of Dubai.
Where Is The DFM located?
As the name suggests, the Dubai Financial Market location is Dubai, United Arab Emirates. Global investors can still speculate on listed stocks if they meet eligibility requirements.
Is The DFM Regulated?
The DFM is regulated by the Securities and Commodities Authority (SCA). This helps ensure that investors receive a degree of security and have channels to raise issues.
What Is The Dubai Financial Market Contact Number?
The DFM can be contacted at +971 4 305 5555. Head to the official website for alternative contact options, including email.