eToro MENA chief: UAE investors back local markets

George Naddaf, managing director of eToro (MENA)/Image: Supplied

Retail investors in the UAE are showing strong confidence in their domestic market while balancing global exposure and defensive assets, according to the latest edition of the UAE Retail Investor Beat by eToro. The survey, which polled 1,000 UAE-based investors, highlights shifting portfolio priorities, growing interest in commodities, and the rising role of AI in trading strategies.

George Naddaf, managing director of eToro (MENA), believes the findings reflect a maturing retail investment sector in the Gulf, where optimism about local markets is complemented by pragmatic diversification.

Shifts in sector and asset preferences

Naddaf said, “There are shifts but there are also constants. Compared to a year ago, financial services, real estate and technology are still the most popular sectors in terms of what respondents are currently invested in. However, energy has overtaken communications and staple and discretionary consumer goods, becoming the fourth most popular sector. Similarly, crypto is still the most popular asset class. However, while alternative investments like real estate were the second most popular option a year ago, they have now been overtaken by commodities, cash and local equities.”

Investor motivations are also evolving. “Investors’ goals have changed slightly as well. 52 per cent now invest for financial independence and 48 per cent for long-term security, compared to 39 per cent and 37 per cent respectively in 2024, emphasising their relative importance over goals like generating capital for a future payment or outperforming their savings account,” Naddaf added.

Balancing regional and global opportunities

Diversification remains a key priority. According to Naddaf, UAE investors are blending home-market confidence with international exposure. “The recent Retail Investor Beat (RIB) survey by eToro reveals that 85 per cent of investors are backing local stocks, and 58 per cent expect the Middle East to deliver the best returns over the next five years. Still, at the same time, investors are not ignoring global markets. The US ranked second with 50 per cent seeing the strongest long-term returns there, while China ranked third at 35 per cent.”

Trade tensions have also shaped investor sentiment. Naddaf said, “Against trade tensions, many are anchoring their portfolios in regional markets that they view as resilient and well-supported by government initiatives (such as the UAE), while trimming exposure to countries most affected by tariffs.”

AI reshaping investor behavior

The survey also captures early signals of AI’s impact on both investment trends and decision-making. Naddaf said, “First, on the market side, investors are channeling capital into technology firms, particularly those adopting or enabling AI, as part of their long-term growth strategies. 35 per cent of respondents are currently invested in technology stocks, while 36 per cent plan to in the next 3 months.”

On the behavioural side, AI is democratising access to institutional-grade tools. “We believe that AI’s biggest influence on retail investor behaviour and decision-making is that it will provide them with valuable tools and capabilities that were historically reserved for institutional investors. That’s why recently eToro introduced a suite of new AI tools that allow vetted Popular Investors to build customisable apps and dashboards on top of eToro’s new public API, enabling them to innovate like top quantitative hedge funds. In addition, our new AI companion, Tori, provides personalized insights and guides users across the platform through natural conversation, while our AI-powered Alpha Portfolios deliver quant-style strategies traditionally reserved for institutions.”

Equities, ETFs and digital assets

Despite their enthusiasm for real estate and traditional asset classes, UAE investors are embracing a broader set of vehicles. Naddaf said, “Equities continue to be extremely popular, with 85 per cent of UAE retail investors holding local stocks — 39 per cent in Abu Dhabi, 28 per cent in Dubai, and 18 per cent in both. Among sectors in the UAE, investors are also most optimistic about real estate, with 55 per cent choosing this sector.”

Digital assets remain prominent. “Crypto is already the most widely held asset class, with 54 per cent of investors participating. While the survey did not ask about holdings in ETFs specifically, when it comes to investing in UAE equities, 30 per cent of investors prefer baskets of stocks such as index funds or ETFs, while 44 per cent favour a mix of both ETFs and individual stocks. Only 24 per cent prefer individual stocks alone.”

Higher risk appetite than global peers

One of the survey’s standout findings is the relatively higher risk appetite of UAE investors compared with their global counterparts. “Comparing the new UAE data to eToro’s global data from Q2, UAE investors appear to have a higher risk tolerance than their global counterparts, as they are more likely to invest in more volatile assets like crypto (54 per cent vs 36 per cent globally) and less likely to keep money in cash (45 per cent vs 68 per cent globally). They are also much more likely to hold derivatives (47 per cent vs 21 per cent globally).”

Confidence in the UAE economy

This appetite for risk is underpinned by strong faith in local markets. “UAE investors are clearly optimistic about the local economy. This is clearly a reflection of confidence. Nearly two-thirds of investors describe themselves as ‘very confident’ in the UAE economy today, and 59 per cent express the same confidence in the long-term performance of local equities.”

That confidence is reinforced by the belief that the UAE market itself offers diversification. “Our survey shows that 64 per cent of retail investors believe that the UAE market itself offers sufficient diversification opportunities. That could be one of the reasons for their confidence.”

Still, Naddaf acknowledges the importance of balance. “Concentration does carry risk. To balance this, many investors are allocating to a range of other assets: cryptoassets (54 per cent), commodities such as gold and oil (47 per cent), cash (45 per cent), and alternatives like real estate and private equity (43 per cent) — in addition to domestic equities. Within the UAE market itself, sector diversification is evident, with 50 per cent of retail investors actively investing in financial services, 47 per cent in real estate, and 35 per cent in technology as well as many other sectors.”

Building resilience with commodities

Commodities are also becoming an important hedge in volatile times. “In response to global trade tensions, 53 per cent of investors are increasing exposure to UAE equities, while 51 per cent are boosting commodity allocations. When asked what type of assets are most resilient in a volatile trade environment, gold ranked number one at 49 per cent.”

For Naddaf, this dual approach strengthens investor resilience. He concluded, “Investors are then able to capture the upside from resilient local markets while cushioning portfolios with defensive assets. In my view, it positions UAE retail investors to remain resilient in the face of global uncertainty.”