Investing in The UAE Stocks & Equities – Keep your wits about you

Why investing in UAE stocks and securities is not for newbies

Investing in The UAE

For many years, investors have been investing in the UAE Securities and Stocks market without knowing the factors that will affect their money once they make such investments. Here are some of the factors you need to consider before purchasing any type of stock equity in the UAE.

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Investing in the UAE

You have to know the performance of the economy if you want to invest in UAE Securities and Stocks. Why do I say this? The performance of the economy often affects the prices of the securities and stocks in the market and this can determine whether you get a loss or a profit depending on your knowledge about the market.

The UAE economy is heavily relient on external factors, of course one of these factors is the price of oil, another is the US dollar which the UAE is of course linked to and heavily dependent on.  Another factor that needs to be considered is the current state of trade with Iran, the UAE conducts huge amounts of trade with Iran and operates as one of those brokers that help Iran get around those sneaky sanctions.  If demand from Iran was to collapse the UAE would have some very serious trade gaps, although they will state this is not the fact anyone operating in the UAE will tell you it is fact.

The rates of inflation in the market

The rate of inflation also affects the prices of UAE Securities and Stocks in the market. This means that you must always know the projection of the inflation if you want to beat the market to make profits from the UAE Securities and Stocks. Remember that low rates of inflation will always give higher returns when trading the Securities and Stocks when compared to the incidences when the rate of inflation is high in the market. In addition, you have to do your research on the market to determine the expected inflation rates in the future prior to making your investments.

The UAE has astronomically high inflation rates, almost all goods have to be imported, most water is created using reverse osmosis plants, although gas and oil are quickly used to create power the prices of goods are driven up by higher import costs due to higher fuel costs and of course higher rents and housing costs mean that the UAE struggles to keep its inflation rates in check.

Inflation rates for the moment have stabilized in the UAE, but you can see how quickly they can jump, take into account the period from 2004 until 2008 when inflation jumped from 4 to 12 percent and then dropped like a stone from 12 to 2% in one year.  Not exactly what you are looking for when you are considering a long term investment although from a short term trading position i guess this could be desirable if you could forecast it.

The knowledge that the investors have

The amount of returns when investing in UAE Securities and Stocks is affected by the amount of information you have about the given security. How do you find information about the Securities and Stocks in UAE? You need to do your research on the internet about the possible causes of changes in the prices if you want to buy a given stock. This will help you determine whether you will make a gain or loss after the investment in these stocks.

There are not that many stocks to trade on the UAE market with just 10 or so stocks listed on the NASDAQ, 20 or so on the DFM and about 15 on the Abu Dhabi index.  You can find pricing and stock information listed here.

UAE government regulations

Sometimes the decision of the government regulation can affect the prices of securities and stocks that trades in the market. This means that you must have knowledge on the policies that the government has about to introduce if you want to make the best choice on the stocks or securities to buy. This will determine the amount of income that you will get whenever you are looking for opportunities to make returns from investment in the market.

Although the UAE market has been working to implement good levels of regulations for trading stocks and shares it is fair to say that is a long way behind the west in terms of the stringency and transparency that it operates under.  You can keep up with trading information and policies on a number of the government websites including the Dubai Chamber of Commerce website.

Market forces

The demand and supply of the bid and ask prices of the stocks and securities often control the price and you need to take care into the consideration if you are thinking about buying stock. You know what the future market forces to enable make returns if you want to make returns since failure to do this can lead to huge losses.

The UAE has a number of very high dependencies on market forces that can send stocks tumbling or rocketing on any one day, they include but are not limited to the state of the world with Iran, the USD, Oil Exports, trade export volume and last but not least the state of the housing market. Dubai lives on selling real estate, when the crash in the global real estate market of 2008 took hold Dubai more than any other Emirates took a massive whack in its financial viability and effectively had to ask another Emirate: Abu Dhabi, to bail it out.

In conclusion, the above information on will give you the tips that you need when you want to consider investing in UAE Securities and Stocks. This will enable you gain more returns that will give you the financial freedom and security that you need.

About John Robberts
John Robberts is a journalist with 12 years experience of living and working in the United Arab Emirates.