Big institutional investors are returning to the UAE's markets, propelling the Dubai and Abu Dhabi stock exchanges into the top four performing measures worldwide.
The arrival of seasoned institutional buyers, who are typically long-term investors, is causing some traders to speculate that an upgrade to MSCI emerging market status could finally become reality this year, as a sign that the UAE's financial markets are at last ready for prime-time investors.
Greater numbers of institutional investors have been pursued for years by exchange officials to give more stability to local markets.
With the UAE's markets now at levels not seen since the Dubai World crisis in 2009, fears of any sudden problems still linger, however.
But institutional investors were being drawn by the improved prospects for the local economy, said Ahmed Beydoun, the head of equity capital markets at Deutsche Bank, among the banks with the biggest distribution networks.
"Interest in the UAE markets has definitely gathered pace throughout the year from institutional investors, this interest should continue if the economic backdrop continues to improve."
The Dubai Financial Market (DFM) General Index is the third-best performing stock benchmark in the world this year, having risen 27.9 per cent since January.
The Abu Dhabi Securities Exchange General Index is the fourth-biggest gainer worldwide with a rise of 24.9 per cent. Both are within bull markets for the year, defined as an increase of 20 per cent or more during a given period of time. Not only that, the dividends on offer to investors across the two indexes are on average between 4 and 5 per cent, sweetening the gains on offer.
Though the UAE is not part of the biggest emerging market index, that was little impediment for institutional investors seeking to make big returns, said Ross Teverson, the investment director for global emerging market equities at Standard Life Investments.
"Although UAE and Qatar are not currently in the MSCI Emerging Markets benchmark, we do look to both markets for investment opportunities," he said. "However, signs of recovery in the Dubai property market are encouraging for the economy and market as a whole and that the outlook for Qatar economic growth remains robust."
The change in the type of investor was significant, said Arindam Das, the head of HSBC Securities Services, the region's biggest custodian and settlement provider.
"Now it's more long-term investors - mutual funds, pension funds, and insurance companies."
ghunter@thenational.ae
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
The schedule
December 5 - 23: Shooting competition, Al Dhafra Shooting Club
December 9 - 24: Handicrafts competition, from 4pm until 10pm, Heritage Souq
December 11 - 20: Dates competition, from 4pm
December 12 - 20: Sour milk competition
December 13: Falcon beauty competition
December 14 and 20: Saluki races
December 15: Arabian horse races, from 4pm
December 16 - 19: Falconry competition
December 18: Camel milk competition, from 7.30 - 9.30 am
December 20 and 21: Sheep beauty competition, from 10am
December 22: The best herd of 30 camels
Liz%20Truss
%3Cp%3EMinisterial%20experience%3A%20Current%20Foreign%20Secretary.%0D%3Cbr%3E%0DWhat%20did%20she%20do%20before%20politics%3F%20Worked%20as%20an%20economist%20for%20Shell%20and%20Cable%20and%20Wireless%20and%20was%20then%20a%20deputy%20director%20for%20right-of-centre%20think%20tank%20Reform.%0D%3Cbr%3E%0DWhat%20does%20she%20say%20on%20tax%3F%20She%20has%20pledged%20to%20%22start%20cutting%20taxes%20from%20day%20one%22%2C%20reversing%20April's%20rise%20in%20National%20Insurance%20and%20promising%20to%20keep%20%22corporation%20tax%20competitive%22.%3C%2Fp%3E%0A
McIlroy's struggles in 2016/17
European Tour: 6 events, 16 rounds, 5 cuts, 0 wins, 3 top-10s, 4 top-25s, 72,5567 points, ranked 16th
PGA Tour: 8 events, 26 rounds, 6 cuts, 0 wins, 4 top-10s, 5 top-25s, 526 points, ranked 71st
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
