DUBAI, 21st November, 2022 (WAM) — Dubai Financial Market (DFM) today launched its new general index culminating the successful accomplishment of a comprehensive transformation of its indices’ methodology. The developed indices provide various market participants with world-class 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 percent threshold caps, quarterly rebalancing, independent methodology oversight and index calculation based on actual free-float. The transformation also includes eight sectoral indices as well as the DFM Sharia Index.
To celebrate 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 between 3rd and 17th of October 2022.
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. 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.”
For his part, 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.”
Key features of the new methodology of DFM indices include:
– Capping the threshold of a DFM index individual constituent at 10 percent of the index weightage instead of 20 percent 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 semiannual review.
– A DFM independent index committee oversees current and future methodology changes.
– The alignment of DFM’s sectors with the Global Industry Classification Standard (GICS) that are tracked by institutional clients.
– The new sectors include; Communication Services, Consumer Staples, Materials, Real Estate, Utilities, Financials, Industrials, and Consumer Discretionary.