The country’s stock market was the best performer in dollar terms last year, rising 37%, the data showed
Dubai financial market. – KT file
The UAE stock market is the second-best performer in 2022 and the best performer in dollar terms, up 37%, according to recent research. Interest in the country’s stocks is likely to continue this year as 11 IPOs are planned for the year.
“The interest in the local market last year was a result of the region’s success in listing many national companies. The GCC’s share of global IPOs jumped to 23% by 2022, with the UAE leading the way, with 12 companies raising 110 billion,” Ritu Singh, regional director of StoneX Retail, told Khaleej Times in an interview.
Singh said the UAE is attractive because the shares are priced in the dirham, which is pegged to the dollar, so there is not much exchange rate risk like other emerging markets whose currencies are not pegged to the dollar. “Also, with oil demand expected to hit record highs in 2023, according to the International Energy Agency, the region and the UAE will continue to enjoy budget surpluses, which will be reflected in their financial markets,” she added.
StoneX Group Inc. is a nearly 100-year-old Fortune 100 company with nearly 80 offices on six continents, serving more than 50,000 commercial, institutional and payment customers and more than 370,000 retail accounts. StoneX Group operates a global financial services network that connects companies, organisations, traders and investors to the global market ecosystem through a unique combination of digital platforms, end-to-end clearing and execution services. The company provides its network, products and services that enable clients to pursue trading opportunities, manage market risk, make investments and improve business performance.
From a macroeconomic perspective, global economic growth is expected to slow down further in 2023. While the outbreak itself has receded somewhat, the impact of the outbreak remains high in many countries struggling to recover. Europe, the UK, and the US are all vulnerable to recession in the year ahead, while growth in emerging and developing Asia is likely to be stronger. A pessimistic scenario is expected if inflation remains stubbornly stuck in the 5% range, although interest rates rise – or worse – pass the 5% mark, confirming the IMF’s forecast that “the worst is yet to come” , StoneX research shows.
Ritu Singh, Regional Director, StoneX Retail. – Photos provided
In commodities, Singh believes that as long as demand is strong and supply is low, prices will keep rising. “If demand continues to outstrip supply, inflation could push commodity prices higher,” she said. Analysts at Forex.com (a subsidiary of StoneX) have closely linked commodity prices to geopolitics, especially after 2022, as supply chain bottlenecks, wars and demand-driven inflation conspire to send ripples through financial markets. “Today, oil prices are caught between concerns about a global economic slowdown, a bitter conflict between superpowers and OPEC’s desire for higher prices. However, oil prices are more likely to end 2023 higher than lower,” Singh said. With the reopening of China and support from OPEC, Forex.com experts estimate that commodity prices will be in the range of $60-110 this year. “So we’re likely to see continued volatility that will be driven by a variety of factors,” Singh said.
In terms of global indices, 2023 could be as volatile as 2022, if not more volatile. Analysts expect the central bank to become less aggressive in its policy tightening before raising interest rates on a complete pause and possibly reversing in the second half of the year. Inflation is likely to remain sticky and a global recession could worsen, dampening consumer spending. Although European stock indexes experienced a strong rebound in the fourth quarter, it is doubtful that the stock market can continue to rise. With the central bank expected to trigger a recession in early 2023, European stock indexes could fall in the first half of the year before starting a slow, drawn-out recovery in the second half of the year. “People are on the fringes and their reactions are more extreme, and that defines volatility,” Singh said.
While online transactions have taken off in one major way during the pandemic, Singh believes that the spikes in every area of consumer interaction will moderate. “Clients who haven’t done it before will realize it’s a possibility and an easy way to get in on the market and add the internet to their portfolio. That knowledge and exposure won’t be taken away,” she says . “I think we’ve created a space where we’ll continue to be involved as investors understand that this is an avenue available to them. More and more people are going to make their own investment decisions and take the control into their own hands, ’ she added.