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Dubai Financial Market launches new general index

Dubai Financial Market launches new general index

Dubai Financial Market (DFM) has launched its new general index, reflecting a comprehensive transformation of its indices’ methodology.

The developed indices provide various market participants with investable and tradeable benchmarks for the DFM equity market. S&P Dow Jones Indices acts as the calculation agent of the indices.

The new general index provides a series of enhancements for investors including 10 per cent threshold caps, quarterly rebalancing, independent methodology oversight, and index calculation based on the actual free float, reported the Dubai Media Office.

The transformation also includes eight sectoral indices as well as the DFM Sharia Index.

Marking this milestone, the DFM hosted a special bell-ringing ceremony in the presence of Hamed Ali, CEO of DFM and Nasdaq Dubai, and Charbel Azzi, head of Asia Pacific, Middle East, Africa at S&P DJI, as well as other senior officials from both sides.

Prior to shaping the final methodology, the DFM offered market participants the opportunity to counsel on its draft during a consultation period in October.

Hamed Ali said, “This significant milestone underscores DFM’s commitment to constantly develop its services as part of Dubai’s strategy to develop its financial markets. The index transformation caters to the ever-growing demand from various investors’ categories towards DFM’s investment opportunities whether to participate in the thriving IPOs that placed us at the center stage globally or to trade on the market.

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“DFM indices align with best practices, providing its expanding base of local and international investors with transparent indices for both equities and equity futures. We would like to thank S&P Dow Jones Indices for collaborating with us as the calculation agent of the new index.”

Azzi commented, “We are very pleased that DFM has selected S&P Dow Jones Indices as the calculating agent for its indices. Our aim is to offer rules-based and robust index solutions that suit the needs of the local markets and enable market participants to meet their investment objectives.”

The new methodology of DFM indices includes:

  • Capping the threshold of a DFM index individual constituent at 10 per cent of the index weightage instead of 20 per cent currently, hence limiting the effect of limited number of companies on the index.
  • Index calculation based on actual free float-adjusted market capitalisation.
  • Quarterly rebalancing of the index replacing the current semi-annual review.
  • A DFM independent index committee oversees current and future methodology changes.
  • The alignment of DFM’s sectors with the Global Industry Classification Standard tracked by institutional clients.
  • The new sectors include communication services, consumer staples, materials, real estate, utilities, financials and industrials, among others

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