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How to Invest in the UAE Stock Market via UAE ETF?

13 minutes
intermediate
Cristian Cochintu
Cristian Cochintu
07 December 2023

Although there is a certain enthusiasm about choosing individual stocks listed on the UAE stock exchanges – sometimes it might be better to consider an ETF. By doing so, you will often invest in a basket of selected UAE stocks in a variety of markets and sectors. 

The United Arab Emirates has fuelled growth in the Middle East and is a rapidly growing hub for global finance and investment. Its dynamic economy and strategic geographic location make it an attractive destination for investors seeking opportunities in the Middle East and North Africa (Mena) region.  

One of the prime avenues for investment in the UAE is the stock market. One of the most straightforward ways to invest in the UAE stock market is through a low-cost ETF that tracks the performance of the local stock markets, providing a relatively easy way to invest in a diversified portfolio of companies.

The iShares MSCI UAE ETF (UAE) is concentrated on some outstanding companies trading on the UAE stock exchanges with impressive financial reports. The UAE is projected to grow substantially in coming years and the UAE ETF is concentrated on industries expected to absorb most of the growth.

Why UAE?

The iShares MSCI UAE ETF ("UAE") seeks to track the investment results of an index composed of some of the best UAE stocks today.  

Why Invest in the UAE Stock Market via ETFs?

In the past, investing in UAE stock markets meant buying stocks, but now investors can buy an index. Exchange-traded funds provide investors with a liquid and cost-effective investment tool that offers a balanced and diversified exposure to the best UAE stocks through a single trade. And it can be traded on the stock market, just like a stock.  

Additionally, investors can track the price of the ETF on the stock exchange during the trading day, and the ETF’s holdings are published daily on the issuer's website. It is a highly regulated product and provides investors with an investment tool to access the UAE stock market quickly and efficiently.

     

About the UAE ETF 

UAE seeks to track the investment results of the MSCI All UAE Capped Index. The index is designed to measure the equity market in the United Arab Emirates (NASDAQ: UAE). It consists of equity securities that are classified in the UAE according to the MSCI Global Investable Market Indices methodology, and securities of companies that are listed in the UAE and have the headquarters and most of their operations based in the UAE.  

The fund generally invests at least 80% of its assets in securities of the underlying index or in depositary receipts representing securities of the underlying index. UAE (the ETF) is significantly concentrated on the UAE stock market (stock exchanges include Abu Dhabi and Dubai).

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The UAE ETF is highly weighted on the top 3 holdings of the 40 stocks portfolio, which are all local-based corporations and make around 44-45% of the fund's assets. In addition to the highly concentrated portfolio weighting to the top 3 holdings, more than 55% of the portfolio is made up of Banks and Real Estate Management and development companies.  

As of December 2023, the industry exposure breakdown shows the Financials leading the fund's assets allocation with over 38%, followed by Real Estate (19%), Communication (18%) and Industrials (12%). Consumer discretionary and Utilities have few percentages, while Energy and Consumer Staples have below 1%.  

As stated in the Fund's current prospectus, the Expense Ratio is 0.58%.

Holdings - Top 10 "UAE" Stocks

The iShares MSCI UAE ETF (UAE) seeks to track the investment results of the MSCI All UAE Capped Index. With 40 holdings as of February 2024, the best UAE shares ranked by weight (%) are:

  1. EMIRATES TELECOM (16,90%)  
  2. FIRST ABU DHABI BANK (15,09%)
  3. EMAAR PROPERTIES (12,31%)
  4. ALDAR PROPERTIES (4,52%)
  5. ABU DHABI COMMERCIAL BANK (4,46%)
  6. EMIRATES NBD (4.38%)
  7. DB ISLAMIC BANK (4.32%)
  8. ABU DHABI ISLAMIC BANK (4.17%)
  9. MULTIPLY GROUP (3.74%)
  10. ABU DHABI NATIONAL OIL COMPANY (3.57%)

*Holdings are subject to change.

#1 UAE Stock - Emirates Telecom

Emirates Integrated Telecommunications Company PJSC provides fixed, mobile, wholesale, broadcasting, and associated telecommunication services primarily in the United Arab Emirates. It operates through four segments: Mobile, Fixed, Wholesale, and Others. The Mobile segment offers mobility services, including mobile voice and data, mobile content, and mobile broadband WIFI services to the enterprise and consumer markets, as well as sells mobile handsets.  

When you invest in the UAE stock market via the UAE ETF, 16,90% of your investment is allocated to Emirates Telecom.

Why Emirates Telecom is one of the best UAE stocks to buy?

  • Trading at 34.7% below analysts' estimate of its fair value
  • Earnings grew by 24.2% over the past year
  • Analysts are in good agreement that stock price will rise by 25.3% in 2024

Risks

  • Unstable dividend track record

#2 UAE Stock - First Abu Dhabi Bank  

First Abu Dhabi Bank P.J.S.C., together with its subsidiaries, provides various banking products and services in the United Arab Emirates, Europe, the Americas, the Middle East, Africa, and the Asia Pacific.

When you invest in the UAE stock market via the UAE ETF, 15,09% of your investment is allocated to First Abu Dhabi Bank.

Why First Abu Dhabi Bank is one of the best UAE stocks to buy?

  • Price-to-earnings ratio (10.6x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 6.26% per year
  • Earnings have grown 4.5% per year over the past 5 years

Risks

  • Unstable dividend track record

#3 UAE Stock - Emaar Properties

Emaar Properties PJSC, together with its subsidiaries, engages in the property investment, development, and development management business in the United Arab Emirates and internationally. It operates through three segments: Real Estate; Leasing, Retail and Related Activities; and Hospitality. The Real Estate segment develops, sells, and manages condominiums, villas, commercial units, and plots of land.

In addition, it is involved in the entertainment activities. The company was founded in 1997 and is headquartered in Dubai, the United Arab Emirates.

When you invest in the UAE stock market via the UAE ETF, 12,31% of your investment is allocated to Emaar Properties.

Why Emaar Properties is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (7.2x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 10.06% per year
  • Earnings have grown 6.5% per year over the past 5 years
  • Trading at good value compared to peers and industry
  • Analysts are in good agreement that stock price will rise by 20.4%

Risks

  • Earnings are forecast to decline by an average of 3% per year for the next 3 years
  • Shareholders have been diluted in the past year

#4 UAE Stock - Aldar Properties

Aldar Properties PJSC, together with its subsidiaries, engages in the development, investment, construction, leasing, management, sale, and related services of real estate in the United Arab Emirates. It develops, constructs, manages, and operates hotels, schools, marinas, restaurants, beach clubs, and golf courses. The company also manages and operates sports clubs, and marine machinery; provides educational services; and operates as an asset management company.

In addition, it is involved in the engineering and general construction works; funding, hospitality, and accommodation village businesses; and provision of real estate brokerage, project management, and development consultancy services. The company was founded in 2004 and is based in Abu Dhabi, the United Arab Emirates.

When you invest in the UAE stock market via the UAE ETF, 4,52% of your investment is allocated to Aldar Properties.

Why Aldar Properties is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (12.5x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 15.2% per year
  • Earnings have grown 14.9% per year over the past 5 years

Risks

  • Large one-off items impacting financial results

#5 UAE Stock - Abu Dhabi Commercial Bank

Abu Dhabi Commercial Bank PJSC, together with its subsidiaries, provides consumer banking, wholesale banking, and treasury and investment services in the United Arab Emirates and internationally. The company operates in four segments: Consumer Banking, Wholesale Banking, Investments and Treasury, and Property Management. It offers current and savings, call, saver, fixed deposit, custody and cash settlement, and e-business accounts; credit and debit cards; loans and mortgages that include personal, car, mortgage, and educational loans; and home, rental, travel, and salary advance financing services.

Abu Dhabi Commercial Bank PJSC operates as a subsidiary of One Hundred and Fourteenth Investment Company LLC.

When you invest in the UAE stock market via the UAE ETF, 4,46% of your investment is allocated to Abu Dhabi Commercial Bank.

Why Abu Dhabi Commercial Bank is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (8.6x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 8.49% per year
  • Earnings have grown 10.9% per year over the past 5 years

Risks

  • No major risks detected for ADCB from analysts checks

#6 UAE Stock - Emirates NBD Bank

Emirates NBD Bank PJSC, together with its subsidiaries, provides corporate, consumer, and Islamic banking services.

When you invest in the UAE stock market via the UAE ETF, 4,38% of your investment is allocated to Emirates NBD Bank.

Why Emirates NBD Bank is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (5.3x) is below the UAE stock market (15.5x)
  • Earnings grew by 97.4% over the past year
  • Trading at good value compared to peers and industry
  • Analysts are in good agreement that stock price will rise by 21%

Risks

  • Earnings are forecast to decline by an average of 3.7% per year for the next 3 years

#7 UAE Stock - Dubai Islamic Bank

Dubai Islamic Bank P.J.S.C., together with its subsidiaries, engages in the corporate, retail, and investment banking activities in the United Arab Emirates and internationally.

When you invest in the UAE stock market via the UAE ETF, 4,32% of your investment is allocated to Dubai Islamic Bank.

Why Dubai Islamic Bank is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (7x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 8.14% per year
  • Earnings have grown 3.7% per year over the past 5 years
  • Trading at good value compared to peers and industry

Risks

  • Unstable dividend track record

#8 UAE Stock - Abu Dhabi Islamic Bank

Abu Dhabi Islamic Bank PJSC provides banking, financing, and investing services in the United Arab Emirates and internationally.

When you invest in the UAE stock market via the UAE ETF, 4,17% of your investment is allocated to Abu Dhabi Islamic Bank.

Why Abu Dhabi Islamic Bank is one of the best UAE stocks to buy?

  • Price-To-Earnings ratio (8.5x) is below the UAE stock market (15.5x)
  • Revenue is forecast to grow 6.24% per year
  • Earnings grew by 50.9% over the past year
  • Trading at good value compared to peers and industry
  • Analysts are in good agreement that stock price will rise by 21.4%

Risks

  • Unstable dividend track record

#9 UAE Stock - Multiply Group

Multiply Group PJSC, an investment holding company, operates in wellness and beauty, media and communications, energy and utilities, and mobility businesses in the United Arab Emirates and internationally.

When you invest in the UAE stock market via the UAE ETF, 3,74% of your investment is allocated to Multiply Group.

Why Multiply Group is one of the best UAE stocks to buy?

  • The price-to-earnings ratio (4.1x) is below the UAE stock market (15.5x)

Risks

  • High level of non-cash earnings

#10 UAE Stock - Abu Dhabi National Oil Company

Abu Dhabi National Oil Company for Distribution PJSC, together with its subsidiaries, markets petroleum products, natural gas for vehicles, and ancillary products in the United Arab Emirates.

When you invest in the UAE stock market via the UAE ETF, 3,57% of your investment is allocated to Abu Dhabi National Oil Company for Distribution.

Why Abu Dhabi National Oil Company is one of the best UAE stocks to buy?

  • Revenue is forecast to grow 6.94% per year

Risks

  • Has a high level of debt
  • Dividend of 5.44% is not well covered by earnings

How to Invest in the UAE Stock Market with CAPEX.com?

With advancements in technology, investors can now access the UAE stock market through online trading platforms and mobile applications. These platforms offer user-friendly interfaces, real-time market data, research tools, and the ability to execute trades at your convenience.  

CAPEX WebTrader and CAPEX.com mobile apps provide access to a wide range of trading and investment options, including stocks, ETFs, bonds, indices, forex, cryptocurrencies, and more. Investors can manage their portfolios, track performance, and stay informed about market developments using advanced third-party tools like TipRanks, Central Trading, or TradingView.  

To start trading the UAE stock market via UAE ETF, follow the steps below:

1. Sign up with CAPEX.com  

No one can trade on the UAE stock market directly, brokerage firms being the only ones that can offer access to the markets. If you are in the European Union, choose an authorized company that is in the records of a leading financial regulatory agency in the EU, responsible for ensuring investor protection and the healthy development of the securities market.

Key Way Investments Limited, which is authorized and regulated by the Cyprus Securities and Exchange Commission, license number 292/16. Administrative Address: 18 Spyrou Kyprianou Avenue, Suite 101, Nicosia 1075, Cyprus.  

2. Open a trading account  

Once you have chosen the broker, you will need to open an account with it. Opening an account with a brokerage firm is akin to opening a bank account, with many firms offering the possibility of opening an online account.  

With CAPEX.com you can open a Trading Account to gain access to 2,100+ leveraged products on shares, commodities, indices, cryptocurrencies, bonds, currency pairs, and ETFs, including iShares MSCI UAE.  

You can also open an Invest Account and buy 5,000+ shares with ownerships listed on 10 global stock exchanges.  

3. Fund your account with money  

Trading on the stock exchange is no longer an activity that only the rich can have access to. Today there are many companies that allow you to start investing with little money. With CAPEX.com you can deposit as low as $100 to open an account.  

Once you have funded your account with an amount of money, you will be able to start trading on the stock exchanges.  

4. Inform yourself and understand the financial instruments in which you invest  

Do not confuse stock market investments with gambling. If you treat the stock market as a bet and if you invest in companies or financial instruments that you know almost nothing about, you will most likely lose money.  

However, if you invest in the UAE stock market through an investment fund that tracks a stock index like the MSCI All UAE Capped Index, in the long term you will have more chances to diversify your portfolio.  

5. Choose your timeframe and open your position  

Timeframes are important considerations when you’re deciding how to take a position on stocks.    

Each Japanese candle presents the price action over a specific period, or to use traders’ jargon, a time frame. Most trading platforms’ charting modules allow you to view candles representing time frames ranging anywhere from a minute to a month.

The trend, meaning the overall price direction, that you’ll see on any chart depends greatly on your time frame. The longer the chart’s time frame, the more established and reliable the key price levels and other support/resistance indicators.    

The 10 timeframes available on our award-winning platform enable a comprehensive detailed analysis of all minor price movements. More than 80 technical indicators and analytical tools, including graphic objects, provide detailed analysis of quote dynamics.

Should you Invest in the UAE Stock Market?  

  • Investing in the UAE stock market is straightforward. Individuals must open a trading account with a broker registered with one of the exchanges in Dubai or Abu Dhabi.
  • If you're just getting started, you'll also want to consider a well-diversified option like the iShares MSCI UAE and gain exposure to 40 listed companies in UAE.
  • As with any stock trading, do your due diligence on the company, sector, economic indicators, and market fundamentals. And, perhaps most of all, know your risk appetite before you jump in.

     

Free resources  

Before you start trading and investing in the UAE stock market, you should consider using the educational resources we offer like CAPEX Academy or a demo trading account. CAPEX Academy has lots of free trading courses for you to choose from, and they all tackle a different financial concept or process – like the basics of analyses – to help you become a better trader or make more informed investment decisions.  

Our demo account is a suitable place for you to learn more about leveraged trading, and you’ll be able to get an intimate understanding of how CFDs work – as well as what it’s like to trade with leverage – before risking real capital. For this reason, a demo account with us is a great tool for investors who are looking to make a transition to leveraged trading.  

FAQs about Investing in the UAE Stock Market

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Cristian Cochintu
Cristian Cochintu
financial_writer

Cristian Cochintu writes about trading and investing for CAPEX.com. Cristian has more than 15 years of brokerage, freelance, and in-house experience writing for financial institutions and coaching financial writers.