Hi, Sunil here to talk about the Dubai stock market index

Why Dubai and not the entire Middle East?

Good question.

Because Dubai is the most developed (as of 2012 at least) and is covered in global news more than its neighbors, my focus has always been on the Dubai Financial Market Index (more below on this).

However, because this is an important business discussion, I will also discuss on the stock market indexes in UAE that give a good snapshot of the overall local economy and where the Middle East markets stand at any given point in time.

If you are a stock market investor like myself, you know how valuable indexes are.

In fact in early 2008 I made the decision that I would no longer invest individually in stocks and rather just in mutual funds and indexes.

(2012 Update: I have done very well with this strategy despite the economic slowdown)

The most popular index globally is the Down Jones Industrial Average in the United States.

This index was formed decades ago to give investors and even the common public an idea of the financial market health in the country.

An index is a basket of stocks from usually larger companies which are seen as the stable economic blocks of the economy. These shares are pulled together and their performances are tracked. When the index is up, the sentiment is generally positive and means the market is doing well.

In Dubai, and the Middle East in general, there was no such thing until very early in the 2000s. That is when the idea of a market index gained some discussion around it.

Later in the early 2000s, governing bodies formed few indexes as the financial markets continued to develop in Dubai and elsewhere.

This was a necessity to promote the stock market, encourage investing and give people an idea of where the local economy stands at any given point in time.

There are four of these popular and most widely used indexes as of 2008. Below is some background on each: