82% of UAE investors expect local stock market to rise in next 12 months

A recent survey conducted by etoro reveals that 82% of retail investors in the UAE are optimistic about their local stock market continuing to rise in the next 12 months. This marks an increase from 76% in March, and it represents the highest level observed since the survey began in November 2024. The optimism is backed by strong confidence in the performance of domestically listed companies, with 93% of investors expressing faith in their long-term growth, up from 90% in March.

Similarly, the perception of the UAE's economy has improved, with confidence rising from 90% to 91%.

UAE retail investors are also maintaining a positive outlook on the broader Middle East region, with 58% anticipating the region to generate the strongest returns over the long term. This optimism surpasses expectations for other regions such as the US (47%) and China (35%). This increased confidence is reflected in their investment decisions.

Among investors adjusting their portfolios in response to geopolitical tensions in the Middle East, the proportion reducing exposure to UAE equities has decreased to 14% from 25% in March.

Despite the presence of elevated global interest rates, a majority of UAE retail investors - 71% - plan to increase their investments over the upcoming 12 months, while 21% intend to maintain their current investment plans. Additionally, 6 months of real market testing for the region has shown that UAE retail investors have not lost sight of the bigger picture.

The performance of the companies themselves has remained robust, with two quarters of earnings confirming this trend. Global investors continue to have faith in the Gulf, even amidst regional tensions. Most listed companies experienced growth during this period, with only those directly exposed to conflict and disruption underperforming.

The rising confidence in the local market follows a decrease in concerns about geopolitical issues. The percentage of UAE retail investors who believe geopolitical tensions will "definitely" impact their investment portfolio in the next six months has dropped from 38% in March to 30%. Conversely, those expecting minimal or no impact have increased from 18% to 25%.

However, this reduced concern has not led to complacency among investors. Almost half (49%) now view long-term security as one of their primary investment goals, a significant rise from 34% in March.

Moreover, UAE retail investors are becoming more discerning about potential investment opportunities within the UAE market. Optimism towards real estate has increased to 58% from 54%, while technology remains relatively stable at 49%. In contrast, confidence in the energy sector has declined from 42% to 35%, and for financial services, it has dropped from 37% to 33%.

Notably, investors have been reallocating their investments, with a significant shift towards gold and oil while crypto investments have decreased. This trend aligns with the understanding that conflicts do not last forever, and a resolution would likely lead to a decrease in oil prices and inflation.