Financial Markets: Diversified Assets Emerging in UAE

Financial markets investors that are looking for ways of gaining stock exposure in the Middle East have started to focus on the United Arab Emirates, as broad improvements in the underlying economy have become increasingly apparent over the last decade.  The country has a rich asset base that has generated long-term portfolio diversification, which means that the region should become less dependant on the fluctuations in oil prices during the next few years.

This is an investment positive for a number of different reasons, as it suggests that the region is likely to experience less volatility in its markets over the next few years.  Emerging markets assets tend to show substantial volatility during times of geopolitical or economic uncertainty.  So the latest developments in the redesign of the UAE economy will help investments in the region during periods of instability around the world.

The chart graphic above shows the large moves higher in GDP growth for the United Arab Emirates.  These gains have been firmly stronger than most of the economies in the region, with only Saudi Arabia showing more growth over the last ten years.  At the global level, we have started to see more of a focus on alternative energy sources and many analysts had previously anticipated a material decline in the national output for Middle Eastern economies.  

But when we look at the macroeconomic trends that have been in place over the last 10 years, we can see that the UAE has absorbed those changes without seeing a material influence in GDP output.  This should make it easier to find investors in Dubai that are positioned in regional stocks and in real estate assets that are placed in some of the more established areas.

Currency Factors in Investments

Another factor to consider is the constantly changing scenarios in global currencies.  Depending on the interest rates situations in areas like the Eurozone and the United States, there are cases where it makes more sense for investors to gain exposure in other regional markets.

This explains many of the reasons why large banks and many financial companies have started setting up shop in the UAE, as it continues to act as a financial hub for many other locations in the Middle East.  One of the best ways to gain financial access to other countries in the region is to establish financial and transactional relationships with some of the larger banking entities, and the UAE offers some unique opportunities to accomplish these financial goals.  So if there are cases where the Euro of the US Dollar are showing material declines, it may be a good idea to look for investment opportunities that might have otherwise been overlooked.

Middle East Investments in UAE

If you are a long-term investor with a conservative outlook, it pays to have broad global exposure in order to ensure against a stock market collapse in a specific region. Investors in Dubai have grown in numbers, and these are the types of relationships that will help you to gain access to a broader number of financial opportunities as they begin to unfold in the Middle East.

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