UAE investors still back local markets, just more cautiously

UAE retail investors remain broadly confident in local markets despite the war and regional volatility, according to eToro’s latest UAE Retail Investor Beat survey (pdf) of 1k investors. Some 91% said they remain confident in the long-term performance of UAE-listed companies, while 90% expressed confidence in the wider UAE economy. Some 83% also said they hold UAE-listed stocks, only slightly below 85% in the previous survey.

The conflict is clearly on investors’ minds. Some 38% said geopolitical tensions in the Middle East would definitely impact their portfolios over the next six months, while another 40% expect some effect. Risk perceptions are rising too, with 35% now viewing the region as economically risky to invest in, up from 30% previously.

That caution is feeding into shorter-term expectations: The share of investors forecasting strong UAE stock market growth over the next 12 months slipped to 42% from 48%, even if another 34% still see moderate growth ahead.

The mood shift broadly tracks what we’ve been reporting in markets: Dubai’s DFM shed 16.4% in March — its worst monthly drop since the pandemic — while Abu Dhabi’s ADX fell 8.9%, as foreign investors turned net sellers to the tune of AED 1.06 bn across both exchanges. Analysts also told us IPO hopefuls were pushing listings from 1H into later this year as sentiment turned more selective, with Dubai Investments the latest to potentially delay the listing of Dubai Investments Park.

The interesting twist is longer-term optimism. The majority of investors now believe Middle Eastern markets will generate the strongest returns over five years or more, rising to 60% from 58%. eToro’s George Naddaf said investors see “higher risk but higher return potential,” with short-term tensions likely not derailing the region’s broader investment thesis.

Portfolio behavior backs that up: Fewer investors are increasing contributions, with 57% saying they added to portfolios over the past three months versus 65% previously. Still, most are not heading for the exits. Some 80% said they have adjusted or plan to adjust portfolios in response to tensions, with precious metals the top beneficiary (56%), followed by energy commodities (43%) and global equities outside affected regions (31%).

What are they still backing at home? Real estate topped sector optimism at 54% (notable given property stocks were among the hardest hit during March’s selloff), followed by technology and energy.

Naddaf said the data points to “a clear shift in behavior rather than a loss of confidence,” with investors staying in the market but sharpening their focus on resilience, diversification, and risk management.