Abu Dhabi, UAEWednesday 28 October 2020

How to invest in stock markets overseas from the UAE

DFM investor wants to widen his interests to the London and New York stock exchanges.

I am from Oman and live in Dubai. I am an investor at the Dubai Financial Market and would like to expand my portfolio to the London Stock Exchange and the New York Stock exchange. But how can I, as a UAE-based Arab, go about doing this? MM, Dubai

• The expert advice

Adel Merheb, managing partner at Tradeyourmarket.com

With most financial brokers offering advanced online trading platforms to their clients nowadays, it is now fairly easy to trade global financial markets using a single platform from almost anywhere in the world – that is, anywhere with internet access.

Not only has it become easy to trade online, but the process of opening brokerage accounts has never been easier as it pretty much happens exclusively online these days.

The competition among online global brokerage firms has become very fierce in recent years, and traders have been the primary beneficiaries by having easier access to global exchanges at reduced trading costs.

As a trader based in the Middle East, the options to access global financial markets are many.

One way would be to open an account with any of the locally-based brokers that can provide access to international markets online, and there are many.

The other would be to simply open an account with any of the top online brokerage companies that are home to the major financial markets such as the United States or London.

Local brokers are able to provide a one-stop shop that can expand traders’ access beyond the GCC markets such as Dubai and Saudi Arabia to reach major global exchanges such as the NYSE and LSE.

Provided that these local brokers can offer competitive rates when it comes to execution costs, it would make sense to deal with a local broker with international access rather than dealing with a foreign broker even though dealing with a foreign broker may have additional advantages such as access to better online platforms and better customer service.

Still, almost any broker with a global coverage should be able to provide access to the major international equity markets.

Most brokers now allow clients to open accounts online, so there should be little hassle in terms of setting up an account whether locally or abroad.

However, one important thing to consider is the fact that with a foreign broker, funds will have to be held outside of your country of residence. To some people this may carry an added element of risk, as most prefer to deal with local institutions.

To sum up, here are the key differences between what a local broker with access to international markets and a foreign broker can provide:

Local broker with international access:

• Dealing with a local entity rather than an entity based abroad

• Access to GCC and key international markets such as NYSE

• The transfer and withdrawal of funds take place through a local bank

• Mostly access to plain-vanilla products (equities, indexes, key currencies and commodities).

Foreign broker:

• Probably better execution and a more user-friendly online trading platform

• Probably access to a broader base of financial instruments such as derivatives and a wide range of products

• Hardly any access to GCC markets

• Probably lower execution costs and better customer service.

• The reader’s advice

Petra Jones, Dubai

I have invested in the London Stock Exchange for a number of years. However, I started doing so before I left the United Kingdom to live in the UAE. This means I use the same broker from the UK that I was using before and I have access to a UK bank account that I regularly transfer funds to from here. That’s not to say it’s not possible for you. My advice would be to use a local broker with access to international markets so that you don’t have to transfer funds overseas.

The next money clinic:

I need some advice to help me to consolidate my credit cards and loans into one monthly installment. I have two loans and three credit card payments every month that are very difficult for me to pay. Also, the interest rates are very high. I have tried many banks but they said I am not eligible for this kind of settlement. My monthly salary is Dh5,000 and my total outstanding debt is Dh60,000. MU, UAE

Every three weeks The National features a reader’s personal finance problem. If you have an issue or would like to suggest a solution for another’s reader’s concern, write to pf@thenational.ae

The advice provided in our columns does not constitute legal advice and is provided for information only.

Follow us on Twitter @TheNationalPF

Updated: August 8, 2014 04:00 AM

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