Investing in stocks is a common way to build wealth among Emirates citizens, but how exactly can you invest in the UAE stock market? There are two different ways how to invest in stocks in UAE, depending on your investment strategy and preferences if you only want to invest in the UAE market or you want to invest in other international markets as well.
In this guide we will go over both options and reveal their key elements to help you make an informed decision.
1. Investing In UAE Stocks
The most common way to invest in UAE stock market is by opening a stock brokerage account with a local broker registered on one of the 3 UAE stock exchanges (DFM, ADX or Nasdaq Dubai). Investors also need to apply for a NIN investor number at the DFM in order to buy stocks on any of the listed exchanges:
- the Dubai Financial Market (DFM)
- the Abu Dhabi Securities Exchange (ADX)
- the NASDAQ Dubai
Below is a detailed break down of 5 simple steps you can follow in order to invest in stocks listed on local UAE exchanges:
5 Steps To Buy Stocks in UAE
- Apply for NIN number
- Choose a stock broker
- Pick a stock (company) you want to invest in
- Check on which exchange the stock is listed
- Open a trade
Here is detailed description of each of the steps you need to take:
Step 1: 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 submit 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 an UAE based-broker.
Step 2: Choose a Stock Broker
Investors who don't have a trading licence will need to buy stocks through:
- A local stock broker – You can pick and choose stock brokers on the DFM official website and sort them by their overall rating
- A local UAE Bank – All of Dubai’s major banks (Abu Dhabi Commercial Bank, Standard Chartered, and ENDB) offer brokerage services to both foreigners and nationals living in the UAE.
- The Ras Al Khaimah Investment Authority – Is a UAE government agency offering brokerage services to UAE citizens
Step 3: Pick a Stock (company) to Invest In
Picking a stock to invest in should be based on your fundamental analysis and research of the company you want to invest in. As a beginner try to avoid investing in small tech companies you have never heard and stay with the ones you know.
A great way to get started is making use of copy trading or financial advisory services from your stock broker or bank.
Step 4: Choose an Stock Exchange
You can choose between 3 stock exchanges in the UAE (DFM, ADX and Nasdaq Dubai) based on where your desired stocks are listed. To get access to either of the exchanges you will need to have a valid trading licence or make use of a stock broker who has it.
Step 4: Buy a Stocks
To buy a stock you will need to fill out a purchase form where you define which stocks and how many you want to buy. Once finished, the form will get submitted to one of the exchanges and you will get an ownership certificate proving that you own the stock.
2. Invest in UAE & Other International Stocks
If you are looking to invest in international stocks beside investing in the UAE market, you should make use of a more hand on approach and open an account with one of the online stock brokers.
Online stock brokers offer a more convenient way to invest in the market, especially for investors looking to buy international stocks. As with all things, doing something online is faster and easier than doing it in person. Online stock brokers enables users to invest in various different markets and asset classes all from the same dashboard and from anywhere in the world. Users are also not required to have a NIN investor number or TIN tax number. Plus a really good thing about an online broker is that you can test your trading strategy with virtual money and gain so much knowledge with their educational tools.
The 3 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 3 top choices:
01. eToro: Best Beginner Stock Broker
Offering a combination of simple order types, access to 2800 commission free stocks and copy trading features, eToro is an interesting stock broker for beginners. The broker features a tool called CopyTrader, which allows users to copy the exact trades of professional traders. It has regularly been awarder for its usability helping users new to trading to step into the market confidently. Beginners will also appreciate the free demo paper trading account that allows them to test their trading strategies with virtual money.
02. Sarwa: Best Full Service Stock Broker
Established in 2017 in Dubai, Sarwa is regulated by the UAE’s main regulatory authorities (DFSA and FSRA) and is therefore considered safe. It is is a full-service broker, meaning it combines automated investing, self-directed trading and financial advisory services at the same time. Users can either use their automated trading services to invest in a diversified portfolio based on their evaluated risk profile, trade on their own or combine both options. This gives users a great selection of different services from the same dashboard, all at very reasonable fees.
03. Interactive Brokers: Best Overall
With an array of over 100,000 financial instruments including 17,500 shortable stocks, deep liquidity and a competitive fees structure, Interactive Brokers seems like a top overall choice for stock traders in the UAE.
While casual traders can choose to invest in over thousands of companies through Interactive Brokers’s GlobalTrader desktop trading platform or the IBKR Mobile app, active traders can speculate on both rising and falling prices of stocks, commodities, currencies, and other assets via their Trade WorkStation Client Portal. All platforms offer extensive customisation options and features for all types of trading such as: dynamic charting, a full-fledged news widget, advanced order types, option chains, and detailed order flow information.
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:
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).
How Does the UAE Stock Market Work?
The stock market works as a publicly available exchange where investors and traders buy and sell shares of companies. Investors become partial owners of the companies they invest in and receive dividends and profits when the companies perform well.
Which UAE Stocks Can You Buy?
There are common stocks, (convertible) preferred stocks, new equity issues, hybrid stocks, and Rule 144 stocks. Apart from these types of stocks, there are stock derivatives which are financial instruments of which the underlying asset is a share’s price.
Can expats or tourists invest in the UAE stock market?
Yes, expats and tourists can invest in the UAE stock market if they obtain a NIN and provide their passport and bank account details.
Do I need a NIN to invest in UAE stocks?
You need an investor number if you want to buy and sell UAE stocks listed on the UAE stock exchanges. However, you do not need a NIN to trade international stocks using an online broker.
Do I need a TIN number to invest in UAE stock market?
No, you don't need a TIN number to start investing.
- 1 1. Investing In UAE Stocks
- 2 2. Invest in UAE & Other International Stocks
- 3 Conclusion