How to Trade in the UAE Stock Market
The United Arab Emirates (UAE) is one of the fastest growing markets in the world. While still rich in oil, the UAE has become incredibly wealthy because of its extensive market liberalization and the resulting billions of foreign investment dollars it has attracted from all over the world. With the proper knowledge and right tools, you also can profit from trading stocks in the UAE.
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Instructions
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How to Trade in the UAE Stock Market
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Understand the UAE stock markets and economy. The United Arab Emirates is a federation of seven emirates (states) located in the southeast of the Arabian Peninsula on the Persian Gulf. The two most populous and highly capitalized emirates are Abu Dhabi and Dubai, which are also the only two emirates that have stock exchanges, the Abu Dhabi Securities Exchange in the case of the former, and the Dubai Financial Market in the case of the latter. The UAE remains a prominent member of OPEC, and although it is far less-dependent on oil exports than it was two and three decades ago, the energy sector is still an important part of the local economy. Periods of global expansion have been particularly fortuitous for the UAE because they have usually driven oil and natural gas prices considerably higher, whereas global contractions have proven especially harsh. Similarly, because of its market liberalization, it has been a primary destination for emerging market investment flows during boom times, but it has conversely been subject to large scale sell-offs when investors lose their risk appetite and decide to trim exposure to emerging markets.
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Track the price movements of the major UAE stock indices, such as the United Arab Emirates Index, Dubai Financial Markets Index and Abu Dhabi Securities Exchange Index. Stay abreast of the news and developments affecting major, high market capitalization companies such as Abu Dhabi Commercial Bank, Air Arabia and Aldar Properties, as well as the general trends in larger sectors like consumer cyclicals, consumer non-cyclicals, energy and finance and specific industries like construction, aviation, real estate and retail.
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Buy stocks in the UAE through your broker. Most sophisticated Western brokerages should be able to buy any stock listed on a major UAE exchange. However, because retail investment from Western countries remains rare in the UAE, many brokers will not be familiar with the companies listed on its exchanges, what the country's currency is or how exactly to go about the transaction. They will probably request that you provide the Committee on Uniform Security Identification Procedures (CUSIP) number of the stock you're interested in buying or some other sort of international identifier. Be sure your broker does not overcharge you when converting your U.S. dollars to UAE Dirhams (as will probably be required to invest in most UAE companies) or level an excessively high commission.
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Open up a brokerage account with a company in the UAE, such as the Abu Dhabi Financial Services Company or Al Ain Centre for Securities Brokerage. With a local broker, you'll have all the advantages of direct access to the UAE market at considerably lower cost than transacting through most Western brokerages, but you don't have as many U.S. regulatory safeguards, and you likely have to accept that your capital will sit in units of UAE Dirham, potentially exposing you to exchange rate risks.
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Resources
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