I am a professional working for a law firm in Dubai. By way of investment, I am interested in buying shares of companies in the UAE. I am new to this concept and would like to know more about this, such as where I should go and whom I should approach. MA, Dubai
The expert advice
Amit Mitbawkar is a senior wealth manager with Acuma Independent Financial Advice
Investing in stocks in the UAE is pretty simple. All you have to do is open a trading account with any stock brokerage registered with one of the stock exchanges in Dubai or Abu Dhabi. That’s the easy part.
The difficult part is choosing the right stocks. This process involves a lot of due diligence on your part in analysing the financials of the companies, economic indicators, the industry, the products and the long-term vision of the company you intend to invest in.
Professional fund managers spend a lifetime perfecting these skills. A lot of money can be made or lost. Needless to say, investing in stocks is not for the weak-hearted.
Another way to invest in the markets is through mutual funds, where you select the fund that you want to invest in with a specific theme, and the fund manager takes care of picking stocks and trading.
If you want to invest in the local and regional markets, consider funds from leading fund houses that invest in the UAE and Mena region.
Some funds that are marketed as fixed-income funds invest in bonds and sukuk in the regional markets, and the pure equity funds invest money in the largest companies in the Mena region. Investing in these types of thematic mutual funds can be a safe way of protecting your money and getting decent capital growth.
If you don’t want to take the trouble or risk of selecting funds yourself, a good route is to select multi-asset portfolio funds. These funds are very good at getting returns with reduced risk. They do the internal fund selection for you, and all you have to do is invest a percentage in each fund, based on your risk appetite.
An easy way to get more information on funds and stocks is to visit www.bloomberg.com and search for these funds on the search bar in the top right corner.
When considering making equity investments, the first thing is to speak with a fully qualified financial adviser to assess your risk profile.
The reader’s advice
Mohammed Khan, Dubai
After seven years of living in the UAE I took the plunge last year and decided to invest in some companies listed on the Dubai Financial Market. I was interested in three companies but placed the majority of my investment funds in Emaar. To actually invest, the first step was to open a stock trading account at my bank so that I could instantly transfer money to a brokerage. The next step was to go to the DFM itself and register for an investor number (In). An In identifies your investor account at the Clearing and Depository System, which holds all the shares. The In then allows you to transfer shares to and from your account each time you buy or sell. Any brokerage will need your In so that transactions can automatically be settled immediately after a trade is executed.
To get your In, you apply at the Investor Services Desk inside the DFM itself. You need identification to do this, such as a passport or Emirates ID. While it can take one working day to receive your In, I received mine immediately. Once I had the number, I then loaded my bank’s stock trading account with credit, phoned my chosen brokerage (which was recommended to me by my bank) and put in an order for the shares I wanted to buy. As mentioned earlier, Emaar was my biggest investment. I bought at Dh2.14 a share, and when I checked this week, those shares were trading at Dh10.10. I wish you luck.
The next Money Clinic question
In the next two years I will have saved Dh180,000 for a deposit on a studio apartment in Jumeirah Lakes Towers. I would like to buy it for up to Dh650,000, including the deposit. My intention is to live in the flat myself, but I may rent it out. I am not working, but I own two mortgage-free one-bedroom flats in JLT from which I get an income. I have Dh60,000 saved and plan to save Dh180,000 by 2016, before I approach a lender to buy a studio in Dubai as a home. Am I still eligible for a mortgage? WP, Dubai
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