Here are some important facts and financial figures about the UAE. Last updated (25/03/2019).
|Stock Market||Recession (of 4 years)|
|GDP Ranking||27th (out of 193 countries)|
|President||Sheikh Khalifa (son of Zayed)|
|Return on 5Yr Government Bond||2.75% (-1.9%=0.6%)|
|Country Risk Premium||0.69% (return needed to switch from a zero risk country)|
|Equity Risk Premium||6.65% (return needed to switch from a zero risk country's stocks to UAE stocks)|
|Ideology||Monarchy within Federal Gov.|
Political and Economic Ideologies Clash ⚔
An inescapable point to take away from this primer is that the UAE has a climate of fear . The government will do whatever it takes to mute uprisings like the Arab Spring in 2010, or even minor whimpers of change. Women as well are only just starting to enjoy more empowerment.
Why’s that a problem in investing? Because the free market system that will develop their economy , diversify it and make it autonomous from oil (in other words, less risky and more valuable) is at odds with a climate of fear. It’s at odds with a controlling regime where freedom of speech, expression, association and media is limited. A free market system is applied to the population of a country . The people. Not just the flag or just the legislature. So, if you exclude a huge chunk of your population from participating in that system fully, then the enrichment process of your country will be slowed down.
Fix this and the UAE have already built themselves a FastTrack to a very sound, diversified economy. It’s a great place to do business if you’re able, especially with those free trade zones. But remember the virtue of patience. The aim of the game is to earn more back from your UAE stock investment than what you put in. We measure the probability of that happening by how reasonably you plot those paybacks. When you look at the UAE as an investment prospect, be honest about what is surely predictable versus what is simply up in the air. Hopefully, what you’ve learn’t about how to invest in UAE stocks from this primer can get you off to a good start.