Buying US stocks in the UAE
Investors are always looking for opportunities to trade and invest in US stocks in the UAE, as these stocks provide opportunities for profits and high returns. Although US law regulates US stocks and bonds and various other US financial products, you do not have to be a US citizen to be able to trade and invest in them. You can also comfortably buy US stocks as a resident of the UAE since there are no laws prohibiting the trading of US investment products to non-US citizens on various stock exchanges, such as the New York Stock Exchange or NASDAQ. So let us now learn more about how to buy and trade US stocks in the United Arab Emirates.
What you should know about US stocks
Based on the legendary Wall Street, the New York Stock Exchange (NYSE) is the world’s largest by market capitalization, trading the stocks and bonds of North American giants. Let’s say an investor or trader from the United Arab Emirates invests in stocks or bonds listed on the New York Stock Exchange. In this case, he invests in the historically strong US dollar and diversifies his investments using the most traded financial instruments around the world.
Shares of US giant corporations are the most demanded financial assets by the general public globally.
Here are the top US stocks traded on the New York Stock Exchange:
Berkshire Hathaway: the investment company owned by legendary investor Warren Buffet.
Alibaba Group: China’s e-commerce giant, owned by Jack Ma.
Visa: The world’s largest credit card provider.
Johnson & Johnson: an industrial giant that produces high-consumer items.
JPMorgan Chase: A diversified financial group.
ExxonMobil: the world’s largest oil and gas producer.
Wal-Mart: The No. 1 supermarket chain worldwide.
Gamble & Proctor: Another industrial giant of mass consumption.
MasterCard: Worldwide credit card provider.
Walt Disney: The well-known content and entertainment company is also listed on the New York Stock Exchange. To learn more about the details of investing in
Disney: Buying Disney shares
Here are the most popular US stocks on NASDAQ:
Apple: The company that revolutionized the world of mobile devices with the production of the iPhone, and it needs no further introduction.
Facebook: Another company that needs no introduction, it is the largest social network worldwide. To invest in Facebook: Buy Facebook Meta shares
Amazon: The most popular e-commerce platform in the United States and the world. To invest in Amazon: Buy Amazon AMZN shares
Netflix: Series and Movies app with the largest number of subscribers worldwide. Investing in Netflix: How to invest in Netflix
Google: A well-known tech giant, we just need to point out that Google shares are called “Alphabet” on Nasdaq.
Tesla: Elon Musk’s vision.
Some of the most popular US stocks have been in the UAE, and there are a large number of other internationally recognized companies and brands available to invest and trade in this country.
Investors in the UAE can also consider investing in the S&P 500 index, which includes the 500 largest US companies that are part of both the New York Stock Exchange and Nasdaq.
This is the indicator that best reflects the two largest stock exchanges jointly. The Standard & Poor’s 500 Index, also known as the S&P 500, is one of the most widely respected stock market indices in the United States (the other being the Dow Jones). It is considered the most representative indicator of the real economy of the United States.
The index is based on the market capitalization of 500 large companies that have issued shares on either the New York Stock Exchange or the NASDAQ Stock Exchange, representing about 80% of the total US stock market capitalization. The components of this index are determined and weighted by the S&Dow Jones P Index rating agency, and it differs from other indices in the financial markets of the United States, such as the Dow Jones Industrial Average or the Nasdaq Composite Index, in the diversity of its components and its weighting methodology. It is by far the most heavily invested stock index in the world. Many people regard it as a directional sign for the North American economy; That is, if the S&P 500 rises, the economy is doing well.
Investing in a financial instrument that replicates and tracks this index is an excellent way to invest in a large portion of the North American economy with stocks of giant corporations.
Working hours of US stock markets in the UAE
The normal business hours for the US stock market, including the New York Stock Exchange and the NASDAQ, are from 9:30 AM to 4:00 PM Eastern Time (ET) on weekdays (excluding stock market holidays). From here, you can see the working hours of the American Stock Exchange (when it opens and when it closes). On early closing days, usually just before or after a market holiday, regular stock trading ends at 1:00 PM ET. In terms of Gulf Standard Time, then,the range of trading hours are:
6:30 PM to 1:00 AM during winter time (November to April).
5:30 PM to 00:00 AM in “Daylight Saving Time” (the rest of the year).
Trade US stocks in the UAE
As an Emirati trader, you will need to open a trading account with an international broker in order to be able to trade US stocks. So, before talking about how US stocks are traded in the UAE, let us first know the criteria that you should look at when choosing your broker
Brokers are not the same when it comes to the products they offer and the cost they charge for their various services. However, each broker can have its pros and cons. You have to understand what they offer to decide which one suits you best.
Here are some of the main differences that can be between brokers, which are criteria you should consider when choosing a broker:
Read more- Best US stocks to invest in 2023
Fees:
There are some brokers that charge trading commissions every time you want to buy or sell stocks. While some other brokers offer to buy/sell stocks without commission and without any fees.
This is one of the most important points that you should consider before choosing a broker.
To understand the effect of trading fees, suppose you are trading with a broker who charges a trading fee of $25 for buying and selling. If you want to buy a $1,000 stock, you need to pay $50 transaction fee ($25 for buying the stock and $25 for selling the stock in the future), that means you pay 5% ($50 / $1,000).
If the average annual profit from the stock market is 8%, you will only get 3% as you will already be charged 5%.
Minimum deposit:
Some brokers require no minimum deposit to start your account, while others specify a minimum amount to be deposited in order to activate your account. For example, Saxo Bank is a great broker that gives investors access to hundreds of products and financial instruments, but requires a $10,000 deposit to open the account. So if you are not willing to invest a lot, then you need to look for some other brokers that require no minimum deposit.
Account opening process:
Opening an account with some brokers is very easy and convenient, and the account verification process can be very quick. In contrast, some other brokers require more documents, proof of income, bank statements, and sometimes they require you to be physically present at their offices to open the account.
Note: This does not mean that the more complex the process, the worse the broker. In fact, some people prefer to take advantage of what these brokers have to offer because they feel more secure with brokers that have high standards for selecting investors.
Documents required to create a trading account
While the required documents can vary slightly from broker to broker, the most common documents required by brokers in order to open a US stock trading account from the UAE are:
- passport
- National Identity
- Proof of address (it could be a utility bill, bank statement with the address shown on it, or even a rental agreement).
Steps to trade US stocks in the UAE
- Choose the broker that best suits your investment goals.
- Create a trading account with him: carry ID and proof of address (electricity, water bills, etc.), through the broker app or via email.
- Make sure you choose the correct base currency for the account: with some brokers, changing it once the account is opened can be a pain. Trading accounts may have US Dollars (USD), Euros (EUR), British Pounds (GBP), Swiss Francs (CHF) and Australian Dollars (AUD) as base currency. Practically all of them offer the choice in US dollars or Euros.
- Make a Deposit: Once the broker has approved the account, it is time to deposit the funds. The methods of depositing and withdrawing funds are usually credit cards, bank transfers or e-wallets (PayPal, PaySafe, Skrill, SafetyPay, Neteller and many more). The options available for depositing funds depend on each broker. An important fact to mention is that most of the brokers allow you to have a mock practice account on their platform i.e. they allow to test their demo account, which is completely free of charge. In other words, you can open a demo account, try out the platform, and then decide whether to deposit money or not.
Some suggestions of international brokers in the UAE
- eToro
- Interactive Brokers
- Trading212
- Saxo Bank
- Swissquote
Let us now learn how to open a US stock trading account in the UAE through eToro broker:
The first step: register with eToro
Visit the eToro website, choose a username, email, and password, read and accept the terms and conditions if you wish, and click Join Now.
After clicking on “Join Now”, an email will be sent to your email inbox for confirmation, login and verification.
Once you have verified your email, you will be able to login to your eToro platform. However, at this point, your account is not really validated yet and there will be restrictions on depositing and trading until you complete your profile.
Second Step: Verify the account
To enjoy faster deposits and withdrawals and trade without restrictions, you need to verify your account. Follow some of the account verification steps and provide the requested information that includes your personal data, proof of your identity, and your residential address.
Note: To verify your account, you will need your passport and a valid utility bill to prove your identity and physical address.
After the verification process is completed, it will take a few days for eToro to verify the information and fully verify your account.
Step Three: Fund the account
Before you can start trading on the eToro platform, you will need to fund your account. You will be directed to eToro’s safe and secure cashier page where you can make your deposit.
To fund your account, simply log in with the username and password you created in Step 2 above, then click the Log In button to continue.
eToro accepts various types of payment methods including PayPal, Skrill, Neteller, Visa, MasterCard, WebMoney, and more.
You should know that the minimum deposit is $50 and the platform will not allow you to deposit less.
Now your account is verified and funded. It’s time to start investing.
To search for the stocks you want to invest in, go to the search bar and type in the name of the stock.
Choose this stock, then click on “Trade”, and then choose the amount you want to invest.
It is important to remember that with eToro you can take part, which means that if the share price is for example $300, you don’t have to pay the full amount to buy it. You can buy a small portion and you may choose to invest only $100, so you would buy 0.33 shares.
Read More= Open a portfolio in the US stock market
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