Most investment products offer global baskets in the major markets. Issam Kassabieh, senior financial analyst at Menacorp, explains who retail investors can look locally
Are their easily accessible platforms to help investors buy individual UAE stocks?
There a few options, thankfully, but perhaps the best first port of call is to contact a trusted equity brokerage or asset management firms. The UAE Securities and Commodities Authority and the UAE Markets themselves – Dubai Financial Market (DFM) and Abu Dhabi Securities Exchange (ADX) – have a list of licensed and active brokers on their websites.
What about products? Are there ETFs or funds that regional fund managers can access?
There are ETFs and funds that investors can invest in through private banks, asset management firms and brokerage firms. [iShares MSCI UAE ETF and WisdomTree Middle East Dividend Fund are two ETFs with heavy UAE weighting – Ed].
What about other certain sectors, such as real estate? Are there funds out there catering to the UAE or Dubai market?
Real Estate Investment Trusts or REITs are now gaining popularity in the UAE, and they allow investors interested in making gains from the real estate market to invest their money in a fund managed by experienced professionals that have allocated the gathered funds across a diverse basket of real estate products varying from residential, retail, office, to social infrastructure such as school and hospitals.
At the moment there are two listed REITs on Nasdaq, Emirates REIT and EmiratesNBD REIT and they offer investors the opportunity invest in the real estate market and benefit from dividend yields, lower capital requirement (for investment compared to purchasing an apartment etc..) and provide regulated disclosures and valuable communication.
Are there different considerations when investing in UAE stocks as opposed to other markets?
I’d say the considerations are very similar to those for international markets. Like any other investment, you have to define your targets – investment timeframe, holding, risk appetite, etc – and invest in the products you are familiar with.
Dangers for non-pro investors are trading on rumours or inside information, not being familiar with indicators and factors related to stock movements and how they could impact their investments, not diversifying their portfolios enough and, finally, not knowing when to call it quits!
What stocks should every investor hold in their UAE portfolio?
Defensive sector stocks are important to hold because they act as a safety net at troubled times and can balance a portfolio once the market is retreating. Also, they tend to pay annual dividends which reduce initial cost and eventually act as a gain on investment.
In the UAE, the banking sector along with the telecom sector are considered defensive sectors and they could very healthy picks to have in one’s portfolio. Aside from the defensive stocks, it is recommended to have high-growth sector stock such as pharmaceutical, healthcare and education stocks – although only a couple are listed – as these stocks tend to grow rapidly at their early stages and when successful can turn into defensive high yield stocks.