Despite ongoing geopolitical tensions over the past six months, UAE-based retail investors are increasingly optimistic about their domestic market, according to the latest UAE Retail Investor Beat survey by eToro. The study, which polled 1,000 retail investors in the UAE, reveals a growing confidence in local investment opportunities.
Growing Confidence in Local Markets
A significant majority, 82%, anticipate the UAE stock market will climb over the next year, marking an increase from 76% in March and the highest level since the question was introduced in November 2024. This optimism is underpinned by strong faith in domestically listed companies, with 93% expressing confidence in their long-term performance, up from 90% in March. Confidence in the UAE economy has also edged up, rising from 90% to 91%.
Investors in the UAE are not only bullish on their home market but also on the broader Middle East region. Over half, 58%, believe the Middle East will yield the strongest long-term returns, surpassing expectations for regions like the US (47%) and China (35%). This optimism is reflected in their investment decisions, as the share of investors reducing exposure to UAE equities has dropped to 14% from 25% in March, despite regional geopolitical challenges.
Investment Plans Amid Changing Trends
Even with global interest rates on the rise, 71% of UAE retail investors intend to increase their investments over the next year, while 21% plan to maintain their current investment levels. As geopolitical concerns begin to ease, the percentage of investors who believe these tensions will significantly impact their portfolios in the next six months has decreased from 38% in March to 30%. Conversely, those expecting minimal impact has risen from 18% to 25%.
Despite reduced concerns, investors remain cautious, with 49% now prioritizing long-term security as a key investment goal, a sharp rise from 34% in March. They are also becoming more discerning about opportunities within the UAE market. Optimism in real estate has increased to 58% from 54%, while confidence in technology has remained steady at 49%, compared to 48% in March.
Shifting Sector Preferences
In contrast, optimism in the energy sector has fallen from 42% to 35%, and in financial services from 37% to 33%. Nagham Hassan, Market Analyst at eToro, observed that the market initially reacted sharply to the onset of conflict but has since adjusted. Investors have shifted away from companies directly affected by the conflict and towards those better insulated from it. This shift is evident in the increased interest in real estate and the reduced focus on energy and financial services, as a resolution to tensions is expected to lower oil prices and ease inflation.
“It’s important to remember the sell-off came from the conflict, not from the companies, and a move driven by conflict reverses when the conflict does,” Hassan added. “It cut both ways too. The market fell a long way from February highs, but that gave anyone who missed the December 2025 rally an entry point. Investors know conflicts do not last forever, and they weigh fundamentals over headlines.”
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