Executive Summary
Dubai’s equity market gained 17.2% in 2025, outperforming broader GCC peers, supported by strong earnings momentum and favorable domestic fundamentals, providing a constructive base as we move into 2026. In this report, we present our outlook for the Dubai Financial Market using a three-factor framework encompassing economic fundamentals, earnings growth potential, and valuation attractiveness, which together shape forward market performance. The macro environment remains supportive, underpinned by resilient non-hydrocarbon growth, low and stable inflation, and a credible policy framework that continues to attract foreign capital. Earnings growth remains the dominant driver of returns, with aggregate earnings projected to grow by 10% in 2026. Real estate is expected to remain a key contributor, with diversified non-hydrocarbon sectors offering steady support, and banks likely to deliver moderate performance amid an evolving rate environment. Valuations remain reasonable, with limited scope for multiple expansion but attractive dividend yields providing an income cushion. Overall, DFM enters 2026 with a positive, earnings-led outlook supported by sound fundamentals, structural reforms, and improving market depth.
