As an investor based or planning to move to the GCC, your primary goal should remain the same as elsewhere: To maximise your returns, the best proven way has been to buy US stocks through local exchanges.
The US remains the largest market in the world with a GDP of $20.953 trillion. And its stock market is still the home of some of the most successful companies in the world.
For example, the FAANG stocks (Facebook [now Meta], Amazon, Apple, Netflix, and Google [now Alphabet]), the fastest growing tech stocks in the world, are all in the US. Four of these have exceeded the $1 trillion market cap mark (for comparison, only 16 countries in the world have more than $1 trillion in GDP).
Beyond tech, many of the world’s top blue-chip companies – that is, stable companies who are industry leaders and have shown consistent records of better-than-average returns – are in the US.
Therefore, UAE and other GCC residents looking to build wealth need access to the US market.
In this article, we consider why the US market has such huge potential and how you can buy US stocks from the UAE or elsewhere in the GCC.
The New York Stock Exchange (NYSE) has the largest market cap in the world at $20.68 trillion. NASDAQ, the technology stock exchange, is second at $9.76 trillion. Japan Stock Exchange, which is third in the list, is just $5.30 trillion.
This means that some of the largest companies in the world are in the US market. As said in the introduction, the FAANG stocks and most of the blue-chip stocks that provide stable returns over the long term are in the US market.
Relatedly, the US stock market also has the highest number of listed stocks. The NYSE has 5,343 listed securities while the NASDAQ has 3,657, the two having the highest number of listed securities in the world.
With these large numbers of securities, it is easier for you to diversify your portfolio by industry and market cap and reduce your investment risk. In a stock exchange with a limited number of securities, you don’t have the opportunity to achieve such broad diversification that is essential to risk minimisation.
The US market is also the most liquid. The NYSE has a transaction volume of $19.34 trillion while the NASDAQ has a transaction volume of $16.79 trillion. They are the two most liquid stock exchanges in the world.
Why is liquidity important?
The more liquid a stock exchange, the quicker you can convert your securities into cash. When a market has low liquidity, you might have to wait for some time before you find a buyer for securities; while waiting, the price of that security can fall significantly, reducing your profit or increasing your loss.
A liquid market will prevent such scenarios.
The Security and Exchange Commission (SEC) is responsible for the listing of securities on the NYSE and the NASDAQ. As a regulatory authority, the SEC has high standards that must be met before a company can trade its securities on the NYSE or NASDAQ; they also have high standards that must continually be met by already listed companies.
These high standards guarantee that investors’ interests are protected at all times and that they can trade securities with full confidence in the market.
How then can you start trading US stocks?
Sarwa Trade is a Dubai-based trading platform that allows you to buy US stocks and ETFs from the UAE or KSA. With this platform, you can buy and sell stocks at zero commission and zero local transfer fees from your bank into the platform.
You can do fractional trading – buy a fraction of a share if you don’t want to buy a single share – and begin trading with a minimum balance of $1. The platform also protects your data with bank-level SSL security while providing you with a mobile-first app that is user friendly.
Start enjoying the benefits of the US market today by buying and selling stocks and ETFs with Sarwa Trade.