Investing In the UAE Stock Market | For Citizens, Expats and Tourists

This guide reveals the different options of how to invest in the UAE stock market. It also answers the most common questions UAE citizens, expats or tourists might have around EIN numbers, tax regulation and access to stocks listed on local exchanges (DFM, ADX or Nasdaq Dubai).

To help users find the ideal way to buy stocks in UAE, this guide breaks down the two options to invest in stocks including their key elements.

What is the stock market?

In simple words, the stock market is a marketplace where companies sell ownership pieces (shares) to raise capital from retail investors like you and me and institutional investors. Investors buy the shares of a company to earn dividends and in expectation of a price rise so they can sell at the upper level. The platform in which the buying and selling of shares happens is known as the stock exchange.

There are three key players in an exchange:

Buyers (Investors): Retail or institutional investors, after analyzing the business, buy the company’s share, expecting to earn a dividend or profit from a price rise.

Sellers (Investors): Those investors who already hold the shares and do not want to hold anymore work as sellers. The reason could be to book profit or cut loss from the holding.

Stockbroker: Individuals have the facility to buy and sell shares directly in the stock exchange; this work is done by the stockbroker. A middleman who connects buyers and sellers for a fee is known as a stockbroker.

There are two main types of stock exchanges:

• Primary Market: This is a place where companies first issue shares to the public for the very first time. This process is called an Initial Public Offering (IPO). Retail investors do not have buys in the primary market; institutional investors buy the shares the company sells in the primary market.
  
• Secondary Market: Institutional investors or any other investor who bought shares at the time of IPO sell them in the secondary market. In the secondary market, existing shares are continuously traded between investors. You can call it a giant resale marketplace for previously issued shares. An individual investor focuses on the secondary market, where constant buying and selling occurs.

So, if you are an individual investor, you can buy and sell shares in the secondary market. There are three stock exchange markets in the UAE:

Dubai Financial Market (DFM)

The Dubai Financial Market (DFM) was founded in 2000 and is regulated by the Securities and Commodities Authority (SCA). It is the biggest stock exchange in the UAE, and this is where I bought my first stock. Initially, it was entirely owned by the Dubai government but transitioned to a public joint-stock company in 2006. 

DFM has listed over 170 securities, which means you can buy or sell 170 company shares in this exchange. It is open only to companies that follow Sharia principles. Most of these companies are based in the UAE, with some from Kuwait, Bahrain, Oman, and Sudan. Trading on DFM is held from Sunday to Thursday between 10:00 AM and 1:50 PM.

Abu Dhabi Securities Exchange (ADX)

ADX was established in 2000, and, like DFM, it is regulated by the Securities and Commodities Authority. The exchange is one of the key players in the UAE’s financial market and contributes significantly to the country’s economic growth.

ADX mainly focuses on companies in the UAE and currently lists 73 securities. Trading on ADX happens continuously from Sunday to Thursday, between 10:00 AM and 1:50 PM.

NASDAQ Dubai

DFM and ADX primarily focus on UAE and Middle Eastern stocks; NASDAQ Dubai has a broader international scope, including stocks, bonds, and REITs from North Africa, India, and Turkey, so if you want to invest in foreign stocks, this is the place.

NASDAQ Dubai is regulated by the Dubai Financial Services Authority, with DFM holding a 66% share. NASDAQ Dubai lists 146 securities and operates from Sunday to Thursday, between 10 am and 2 pm. Additionally, individual investors in the UAE can trade on the New York Stock Exchange (NYSE) using apps like Sarwa Trade.

New York Stock Exchange 

If you want to buy American company shares, like Google, Apple, Tesla, etc., you have to make a transaction on the New York Stock Exchange. The New York Stock Exchange (NYSE) in New York City is the largest in the world. It has over 2,400 listed securities with a market capitalization of $26.2 trillion. Many of the world’s biggest companies are listed on the NYSE, giving investors access to top-performing stocks across various industries.

In comparison, the Dubai Financial Market (DFM) lists 170 securities, the Abu Dhabi Securities Exchange (ADX) lists 73, and NASDAQ Dubai lists 146. The market caps for these exchanges are $97.38 billion for DFM, $199 billion for ADX, and $74.66 billion for NASDAQ Dubai.

UAE stocks are good for investment, but you may want to buy the shares of companies in the biggest economy in the world. Swarma trade can help you buy shares from the New York Stock Exchange.

How to buy stocks in the UAE

This guide will walk you through the key steps in buying stocks in the UAE.

5 Steps to Buy Stocks in the UAE:

Buy stocks by completing and submitting a purchase form to the appropriate exchange to receive a certificate of ownership.

Step 1: Get a NIN (Investor Number) by applying through the DFM, either online, in person, or via a UAE-based broker.

Step 2: Choose a stock broker if you don’t have a trading license, selecting from local brokers, banks, or the Ras Al Khaimah Investment Authority.

Step 3: Pick a stock to invest in, focusing on well-known companies or using copy trading and financial advisory services.

Step 4: Choose a stock exchange—DFM, ADX, or Nasdaq Dubai—based on where your selected stocks are listed.

Step 5: Buy stocks by completing and submitting a purchase form to the appropriate exchange to receive a certificate of ownership.

Here is a deeper look:

Understand the UAE Market 

Before investing, you need to understand how the UAE market actually works. Without knowledge, it is highly probable that you will lose money, as I did in my initial days. UAE has three main exchanges: the Dubai Financial Market (DFM), the Abu Dhabi Securities Exchange (ADX), and NASDAQ Dubai. Each exchange operates independently, with its own regulations, listing requirements, and trading hours.

Obtaining Your Investor Number (NIN)

This unique identifier is essential for trading on the DFM and ADX. The process of obtaining your NIN is relatively straightforward. You can apply directly through the DFM mobile app for a simplified experience. Alternatively, many DFM-licensed brokers can assist you with obtaining your NIN by filling out the Investor Number Request Form on your behalf.

Selecting a Broker 

For better execution and a smooth process, a good broker is needed. Different brokerage firms cater to various investor needs and preferences. Take some time to research and compare different options based on several key factors. Consider the fees of opening and maintaining an account, including minimum balances, transaction costs, and potential inactivity fees. 

Researching and Investing Wisely

Once you’ve secured your NIN and chosen a suitable broker, it’s time to look for good opportunities. Most investors lose money on the initial day because they put money without analysis, so analysis is important and should not be ignored.

Learn how the stock market works.

If you have seen any auction house, think of the stock market like that: Buyers and sellers come together to negotiate a price they’re both happy with, in this case, for shares of a company. Companies looking to raise capital list their shares through an initial public offering (IPO). Once a company’s stock becomes public, individual investors and institutions can buy and sell those shares.

Investors who believe a company’s future is bright will buy shares in anticipation of price rise and to earn a dividend. And the opposite who do not want to hold their shares anymore can book profit or loss and sell their shares.

To trade, you need a stockbroker; they act as a middleman, and they open and close positions based on your instructions. In leveraged trading, your provider takes on the role of the broker. Today, most retail stock trading happens through online platforms.

Understanding the difference between investing and trading is key to aligning your financial strategies with your goals. Investing focuses on long-term growth through buy-and-hold strategies, leveraging compounding returns over years or decades. Conversely, trading aims for short-term profits by frequently buying and selling assets, requiring active monitoring and quick decision-making to capitalize on market fluctuations.

What moves the price of shares?

When companies want to list their shares on the stock exchange, they set the price in an IPO and launch it on the stock exchange. This sets the initial price, and after the launch, the price depends on supply and demand. A company can only launch a limited number of shares. While companies can issue more shares or buy back existing ones to adjust supply, the overall number remains known.

Simply put, the price of a company’s shares is driven by the balance between buyers and sellers, the simple supply and demand you may have learned in high school. The price increases when there are more buyers than sellers (high demand). Conversely, a surge of sellers (low demand) pushes the price down.

The factors that influence the share’s demand and price shares are the following:

• Company Performance: In the long term, the, share price depends on how the underlying business is doing. A company’s financial health is a major determinant. Regular reports on earnings, revenue, and profit (including earnings per share or EPS) are reviewed by investors. A company posting good results can see good demand from investors.
  
• Economic Conditions: The overall health of the economy where a company operates plays a role because, in a good economy, companies perform better and vice versa. Positive economic indicators like strong GDP (Gross Domestic Product) or healthy retail sales can lead to investor optimism and rising share prices.
  

• Interest Rates: When interest rates are high in a country, people spend less which impacts company’s performance and that indirectly impacts the share price. While interest rates are high, investors can get good returns from low-risk options like savings accounts. This can lead to less investment in the stock market, potentially pushing share prices down.
  
• Market Sentiment: Investor psychology, often referred to as market sentiment, also plays a part, like in anticipation of bad news it can be the psychology of investors to ook profit which can lead to share’s price to decrease. Public perception and overall market mood can influence demand for a specific stock. This can lead to speculative bubbles where prices inflate rapidly based on hype rather than solid fundamentals.

Know the difference between buying and speculating on the share price.

Before you enter the stock market, you must find out what your goal is, whether it is to invest money to gain in the long term or to trade frequently to generate income; it was my biggest confusion in the initial days. The difference in trading and investing is that the former is treated like a business to generate income and later to generate wealth. Both differ in the time frame the stock is held. 

Buying shares

Traders buy shares in anticipation that they will increase in price and can be sold later for a profit, the conventional wisdom of buy low and sell high. Traders may also take positions over a longer period, attempting to profit from share price changes and dividend payments.

You can buy a share of a company and keep it as a holding or trade for a short period of time. Stock ETFs allow you to hold a pool of stock in different or the same sectors.

Speculating on the price of a share

You may be familiar with the futures and options; traders use derivative products that take their value from the underlying market’s price. These do not require traders to own the shares so, while traders will not have shareholder rights or receive dividends, they can take a position to profit from both falling and rising prices. Traders will hold short- to medium-term positions and focus on smaller market movements.

You can trade shares with eToro:

CFD trading: You can go long and short and trade certain shares pre- and post-market hours. You will be trading on leverage with CFDs.

Build a stock trading plan.

Almost all new traders do not have a plan initially when they enter the market. I was buying and selling on the tips in my initial days; this is the worst thing you can do as a beginner. Not having a plan and following others is a sure way to lose money. A good trading plan can help you manage your risk, achieve your goal, and make efficient use of your capital. A good trading plan helps hugely in both trading and investing.

Understand the risks and charges.

Yes, you can make great wealth from investing, but losing is also a part of the game, so an investor must know the risk. The good thing is that your loss is limited to what you invest, so if you put in $1000, that’s the most you can lose. There are also fees to consider, but some brokers, like IG, offer commission-free trades (up to a certain amount). With IG, you will pay zero commission on US share trades up to 50 per month and from £8 on UK share trades.

For those with small capital but want to make big positions, you can do it with CFDs (Contracts for Difference). These let you trade with a smaller amount upfront (like a 20% deposit), which can increase your profit. For example, let’s say you want to buy 1000 shares of a company at a share price of $1 per share. To open a normal trade with a stockbroker, you must pay $1000 (ignoring any commission or other charges). If you had opened your trade with a leveraged provider instead, you might only be required to put down a margin requirement of 20% on the same shares – this would give you a $1000 exposure, with just $200 needed to open the position.

But be careful because it can also magnify your losses! There are tools to help manage this risk, like stop-loss orders, but they’re not foolproof. Stop-loss orders can be impacted by slippage, which is the execution of a trade at a different price, resulting in loss. However, you can protect yourself against slippage by attaching a guaranteed stop-loss. Unlike other providers, eToro doesn’t charge you anything upfront to use a guaranteed stop, but there would be a small premium to pay if it is triggered.

Open a live account

If you want to open a live account for stock trading or a CFD trading account, it is easy with IG. It is a straightforward process, as both can be applied via the same form. You could be ready to open your first position with these simple steps:

Fill in our simple online form

The first step is to fill out a simple form requiring you to fill in your personal experience in trading like you are a new trader or have any experience.

Submit required documents

After you fill out the first form, you will need to provide the required documents: proof of identity and proof of residence.

Get Your Own Investor Number (NIN)

To get started you will need to apply for an investor number by filling out the Investor Number Request Form and submitting it with your signature and required documentation to the DFM. You can apply online via eServices, make an actual office visit at the DMF trading floor or contact a UAE based-broker.

Choose your account type.

Now, after providing the required document, you need to choose between a leverage account or a stock trading account.

Fund your account and trade.

After the account completion, it is time to fund your account and take your first trade. Also, you can withdraw your money anytime you want.

You might consider opening a demo CFD trading if you aren’t confident enough to start trading on live markets. An eToro demo account comes preloaded with virtual funds, which can be used to practice trading thousands of shares. Once you’ve familiarised yourself with the platform and how to place trades, you may want to consider upgrading to a live account.

Find a stock trading opportunity.

IG offers a wide range of trading tools that will enable you to identify your first opportunity, including: 

• Stock Market Screener: The stock market screener allows you to filter shares by country, sector, or index, and you can sort them by earnings per share, market cap, and other criteria. So, if you want to filter stock for your research purpose, you can use it.
  
• Technical Analysis Tools: It comes with a good range of tools; you can use technical analysis with IG’s robust HTML5 charts, featuring indicators like Bollinger bands, RSI, and moving averages.
  
• News and trade ideas: You can stay informed with news and trading ideas from expert analysts and in-house financial writers, highlighting key stocks and market opportunities.
  
• Trading alerts: eToro provides a feature to set up trading alerts to receive notifications when a share price hits a specific target or moves by a certain amount.

Open, monitor, and close your first position.

When you start trading, you have to decide whether you want to buy or sell. Buying opens a long position, meaning you profit if the share price goes up. Selling opens a short position, where you profit if the price drops. After opening a trade, you can set stop orders to automatically close the trade at a loss if the market turns against you or limit orders to close it at a profit if the market favors you.

You can also choose to buy shares directly through a share trading service. This way, you’ll receive dividends, have ownership rights, and potentially benefit from long-term price increases.

You can keep track of your positions through your workspace, watching as your profits or losses change with the market. When you’re ready to close a trade, simply click on the position and choose to close. If you sell your shareholding to fully exit your position, your final profit or loss will be determined when the trade is closed.

If you want you can manually close your trading positions by taking an action opposite to your opening trade. For example, if you started by buying a share, you can close that position by selling the same share, and vice versa. In my initial days, stop loss order helped me in controlling losses.

There are three main types:

1. Market order: This order tells your broker, like Sarwa Trade, to buy or sell a certain number of shares at the current market price. For instance, if your order is to buy a certain share at 11 pm, whatever the price, that time will be executed as your entry.
   
2. Limit order: With a limit order, you instruct your broker to sell your shares only if the price reaches a certain level or higher or to buy shares if the price drops to a certain level or lower.
   
3. Stop order: This is a must for every trader, especially for beginners.SL order turns into a market order once the stock price hits your specified price. Your broker then buys or sells at the next available price.

Why you should buy stocks in the UAE

All the wealthy people in the world have become rich by holding stocks. Stocks offer the highest returns compared to other investment options like bonds, savings accounts, or real estate. If you are looking to grow your wealth, you should have stock in your investment portfolio. Warren Buffet and Elon Musk are some of the examples. 

To compare returns on different asset classes, let’s consider four investors, each starting with 100,000 AED. The first invests in a savings account, the second in bonds, the third in real estate, and the fourth in the S&P 500.

After one year, the results are quite telling:

• The first investor’s savings account grows to 101,750 AED.
• The second’s bonds increase to 102,700 AED.
• The third’s real estate investment rises to 108,320 AED.
• The fourth, who invested in the S&P 500, saw the most significant increase, soaring to 121,360 AED.

It’s not like you will lose money with stocks, but it highly depends on the market condition and sentiment of the market at the time of selling. Studies, including one analyzing the S&P 500 from 1926 to 2019, show that the longer you remain invested in the market, the lower your risk of losing money and the higher your potential returns. For instance, if you stay invested for five years, the likelihood of losing money drops to 5%. If you extend that to ten years, the risk falls even further to just 0.2%.

Best Stocks in UAE

Top Emirati stocks with the highest daily price increase: These companies have shown the most significant growth, but always consider all factors, including share price and market cap, as there’s a risk of retracement.

Click here to see up to date data

Factors to consider before buying stocks in the UAE

An investor is always needed to do a thorough analysis and consider the factors before buying any asset. 

Factors relating to a particular stock

Investing in stocks isn’t just about picking any stock from the market, if you blindly pick the stock and buy it chances are high that it will result in loss. Buying stock needs careful consideration to ensure it aligns with your investment goals. Some stocks will increase in value and earn you money, while others might decrease and lead to losses. Each stock is unique, and not all are suitable for every investor.

Therefore, as a minimum, you must research if a stock is good for your investment goals by understanding its: 

• Returns: You should know what your expectations are regarding returns, you should start by researching the stock’s historical returns. While past performance doesn’t guarantee future results, it does provide useful insights; this way, I learned how stocks behave in different conditions. Conduct a fundamental analysis to evaluate the stock based on factors like earnings, debt, and assets and consider how industry trends might impact its performance.
  
• Risk: Any analysis in financial market should be started with risk, without risk there is no reward. Understanding the stock’s volatility—how its price fluctuates over time, be it daily, monthly, or annually—is crucial. This will help you gauge the potential risk of losing money.

Investors also look at other metrics such as financial performance, management quality, and price volatility using the beta range. These are more complex and typically covered in advanced discussions on stock investment.

Factors relating to an investment portfolio of stocks

Diversification: Your defensive foundation 

Let’s say you have all your eggs in one basket. If you drop that basket, all the eggs break! That’s kind of what happens when you invest all your money in just one stock.

Sure, that one stock could make you a ton of money, but if the company does poorly, you could lose everything. The key is to grow your money, and you can’t grow money you’ve lost. 

It’s much safer not to “put all your eggs in one basket.” Harry Markowitz, a Nobel Prize-winning economist and the pioneer of Modern Portfolio Theory, suggests that the best way to reduce risk and maximize returns is by creating a diversified portfolio. This means owning a mix of assets that don’t move in tandem. Specifically, stocks in your portfolio should be uncorrelated or negatively correlated. Uncorrelated stocks don’t affect each other’s performance, while negatively correlated stocks move in opposite directions; if one goes up, the other goes down.

You reduce your risk by having a mix of uncorrelated or negatively correlated investments. Even if one investment loses money, another might make money to help even things out.

Diversification: Experienced investors suggest no more than 20% in one industry 

Thinking of your money getting multiplied is exciting; that’s why Investing in stocks is thrilling, particularly when you apply your own research and instincts about a particular industry. You can invest in thematic ETFs or specific stocks within an industry. 

However, it’s wise not to invest too much in just one area. Kevin O’Leary, a well-known investor and star of the TV show “Shark Tank,” advises against having more than 20% of your portfolio concentrated in any industry. For someone focused on growth, this typically means limiting tech stocks to no placing more than 20% of their investments. Overall, the key is avoiding overly investing in one sector and ensuring your investments are spread across various industries.

Risk tolerance

Everyone’s financial situation is unique, right? Some people plan for retirement soon, while others have decades to go. That means the kind of risks you’re comfortable with (risk tolerance) will be different, too. Because of that, simply copying someone else’s investment portfolio might not be the smartest move. The key is building a portfolio that fits your risk tolerance and financial goals. After all, it’s your money!

Long-term investing

In my initial days, I was waiting for the market to open, this became an addiction and led to lose good positions. Every day, the market can appear unpredictable and volatile. However, the key to growing your wealth is spending more time in the market rather than frequently buying and selling stocks. This approach avoids the pitfalls of trying to predict the best times to buy and sell, often referred to as “timing the market.”

The reality is the longer you stay invested, the better your chances of increasing your wealth. In the short term, market prices are often influenced by investors speculating on potential price changes. Over the long term, however, stock prices generally align more closely with their true underlying value.

Focusing on long-term investment is a smart strategy to both safeguard and enhance your portfolio’s value.

If you’re ready to begin your investment journey in the UAE and work towards your financial goals, consider scheduling a free consultation with a Sarwa Wealth Advisor. We’re here to help you on your path to financial growth.

The 4 Best Online Stock Brokers in UAE

Choosing the right online stock broker with the right fee structure will make the difference between you making profit and you losing money.

After analysing 133 brokers available in UAE and comparing them across 9 major categories, we have come up with a list of the best online stock brokers for UAE traders. Below is a short list of the 4 top choices:

Top UAE Stock Brokers Compared

The highest rated stock brokers for UAE-based clients are compared in the table below.

What Are The Most Traded Stock Exchanges in UAE?

The below section breaks down the 3 main stock exchanges in UAE, starting with the biggest – Dubai Financial Market.

1. Dubai Financial Market (DFM)

The DFM is founded in 2000 and more than 170 Sharia-compliant companies are listed on it. Companies that are ‘haram’ aren’t listed on the DFM and the Securities and Commodities Authority (SCA) regulates it.

2. Abu Dhabi Securities Exchange (ADX)

The ADX is founded in 2000, based in Ras Al Khaimah, Al Ain, Fujairah, and Sharjah, and UAE companies are traded with them.

3. NASDAQ Dubai

The NASDAQ Dubai is founded in 2005, located in the Dubai International Financial Center (DFIC), and lists local and international companies. Companies like the Bank of London and the Middle East and Real Estate Investment Trust are listed on the NASDAQ Dubai. 

Watch the short video recap:

Conclusion

Stocks are an essential part of any investment portfolio due to their historical record of providing higher returns than other options like savings accounts, bonds, and real estate. If you look at the richest people in the world, they became rich by holding stocks in some companies. When trading stocks on exchanges, it’s important to have a National Investor Number (NIN) and a broker. 

Before investing in any stock, conducting a fundamental analysis is crucial to ensure it is a good investment so you don’t lose your hard-earned money. This involves assessing the company’s financial stability, market position, and potential for growth. 

Additionally, it’s important not to concentrate all your investments in one place. Diversifying your investments across different asset classes and sectors can help minimize risks and maximize returns. Finally, when choosing a broker, look for one that offers low commission rates, an efficient online presence, a user-friendly mobile app, good data security, and excellent customer support to facilitate a smoother trading experience.

The most common ways to invest in the UAE stock market are using an online stock broker, a local stock broker or a UAE local bank. You can choose either of this options, depending if you want to invest in UAE market only (local broker, UAE bank) or you want to invest in other international markets as well (online stock broker).

Stefan Grasic

Stefan Grasic (Dipl.-Jur) is the owner of Business24-7 and has considerable experience in the financial and investment niche, but also enjoys writing articles for the general readership. Stefan is an active stock, CFD, crypto and general investment researcher, advising blockchain companies such as Blockbird, GoCrypto, Hive Terminal at their start up level. Stefan began trading in 2010 as a college student. Money was tight,…

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