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Investing in Nasdaq’s Dubai Index – What Do You Need to Know?

The world is packed full of dominant indexes, many of which are home to the biggest companies and commercial entities in the world.

For example, the S&P 500 in America boasted a total market cap of $31.61 trillion at the end of 2020, while the tech-led Nasdaq 100 was slightly lower at around $15 trillion.

However, there other indexes littered across the four corners of the globe, including the Nasdaq Dubai. But what exactly is this entity, and how can you look to trade this as an eagle-eyed investor?

What is the Nasdaq Dubai?

In simple terms, the Nasdaq Dubai serves as the international financial exchange in the Middle East, enabling companies to benefit from a broad investor pool that extracts both regional and international wealth.

As a result of this, it’s now a popular and globally-recognised index, and one that may be home to some exciting investment opportunities that may otherwise have gone unnoticed.

This index also reflects the unique role of Dubai in the global economy, as it continues to provide a bridge between eastern and wester economies while benefiting from sustained economic diversification in the region.

More specifically, Dubai continues to see its own GDP grow as it enters into diverse industries such as real estate, transport and tourism, enabling it to appeal to a broad investor set from the Middle East, Asia, Europe and the US.

This growing diversity is also reflected by the biggest and most profitable sites on the index, the top 12 of which boasts a combined market capitalisation value well in excess of $229 billion.

This list is topped by Sauda Basic Industries Corporation, which remains the biggest petrochemical firm in the whole of the MENA region. 

Then there’s Al Rajhi Bank (the heaviest lender on Tadawul) and the Alinma Bank, while Etihad Etisalat (which is a unit of the UAE’s largest telecom operator of the same name) is a more recent entry to this list.

Where to Trade the Nasdaq Dubai Index

Of course, you can look to trade or invest in individual stocks on the Nasdaq Dubai index, but this can be a risky proposition that may leave you exposed to just one or a handful of securities.

A far better strategy is to leverage investment vehicles such as CFDs or spread betting. Both are financial derivatives and highly-leveraged products, which means that you can speculate on relevant price movement rather than owning the underlying stocks.

With CFDs, you’re essentially entering into a contract with a designated buyer and seller, which stipulates that the former will have to pay the difference between the current value of an asset and its value at the time the contract is concluded.

Spread betting is a simplified version of this, where investors simply speculate on whether an asset’s price will rise or fall within a designated period of time. 

This vehicle has become increasingly popular of late, primarily because any profits generated are completely free from capital gains tax and stamp duty. Conversely, you’ll have to pay capital gains tax on CFD profits, so you should keep this in mind when plotting your market course.

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