Where To Buy Stocks In UAE - How To Buy Stocks In UAE

Where To Buy Stocks In UAE: We often oppose savings and investment in the stock market via shares for fear of risk. A share is a financial investment that can be more advantageous for the individual than certain savings solutions. Investing in stocks certainly requires knowledge of stock brokerage. Selectra's focus on this investment solution: how a share works, how to buy a share, and how to invest in the stock market without taking too much risk.

How stocks work

Stocks are the most frequently traded financial securities on the financial markets. For many individuals, getting into the stock market is therefore about investing in stocks. 

Related article: How do stocks and investing work?

What is stock?

A stock is a title deed representing a share of a company. When the individual buys a share, he becomes the owner of part of the capital of the company; he is said to be a shareholder of the company in question. Knowing that the total number of shares defines the total share of capital held in the company: the greater this number, the greater the rights of the shareholder.

The rights held by the shareholder - therefore proportional to the number of shares - can take several forms:

• A right to the profits of the company, in the form of dividends;
• A right to the company's assets, i.e. a preferential right in the context of a capital increase
• A right to information, in particular on the annual accounts of the company;
• A right to vote during general meetings of the board of directors.

Thus, the value of a company is obtained by adding up all the shares it has issued; this is called stock market valuation. This valuation is dependent on the stock market and its fluctuations: the upward or downward trend in the stock market sets a price for the value of the share over a continuous period.

A company can issue shares for different reasons – to expand domestically or internationally, to increase research and development. Market capitalization meets a need for owner financing, which prevents it from having recourse to financial investors on the stock markets or from borrowing from a bank.

Where To Buy Stocks In UAE?

Investing in the stock market in company shares will concern a large number of profiles, natural or legal persons without distinction: individuals, professionals, and companies.

The exchange of shares takes place on a stock exchange. In UAE, the best-known stock market is the Dubai Financial Market(DFM). In the United States, it is the NYSE (New York Stock Exchange).

Company shares are traded on two types of the stock market:

1. The primary market is also called the new stock market. A company can issue new shares in the event of an IPO, or when it needs funds and does a “capital opening”. The share price is set by the company, in conjunction with regulatory authorities such as the AMF in France;
2. The secondary market is defined as the stock exchange market. This is where investors buy and sell their shares based on the market price (fluctuations in supply and demand).

When to place stock market orders?

Buy and sell orders are managed centrally on the computer system of the stock exchange. The most liquid and most traded securities are quoted continuously, without interruption (between 9 a.m. and 5:40 p.m. for French shares). The other securities are exchanged once or twice a day at fixed times. This is called listing at fixings, 2 fixings per day at 11:30 a.m. and 4:30 p.m.

Related article: When to buy stocks for beginners

Why does the price of a stock go up or down?

When you want to buy and sell shares, it is essential to remain attentive to the movement of the stock market price. What makes a stock's value go up or down? As a reminder, the Stock Exchange is a place of continuous securities trading. The value of a stock can fluctuate by as much as two from one day to the next depending on various factors.

In concrete terms, the stock price changes according to supply and demand  :

• The stock price rises when the number of people who want to buy a stock exceeds the number of people who want to sell it;
• The stock price drops when the number of people who want to sell a stock exceeds the number of people who want to buy it.

The reasons for stock market fluctuations can be summed up in a few points:

1. The financial health of the company issuing the shares can send a positive or negative signal to its shareholders (ability to pay dividends, an annual report measuring a negative debt capacity, etc.);
2. Changes in corporate governance ;
3. The sector of activity of the company can be perceived as in the development phase or on the contrary going through serious difficulties;
4. The economic or geopolitical situation of a country can destabilize the stock market price.

Choose your stock broker

The second step after choosing your investment vehicle is to choose a financial intermediary who will be responsible for administering the investment portfolio. This intermediary can be either a brokerage firm, an online broker, a traditional bank, or an online bank.

The choice is varied and has specificities. It is this intermediary who is in charge of managing the stock market orders that he will place on behalf of the investor. The stock market order is a request to buy or resell a share indicating the security to be traded, the number of securities, the type of settlement, and the period of validity of the offer.

At this point, the investor can manage his portfolio in different ways:

• He can independently manage the stock market orders that he will transmit to the financial intermediary. This type of management is aimed at seasoned profiles, and familiar with the world of brokerage (particularly in terms of risk).
• He can rely on the expertise and advice of a brokerage manager by delegating the management of his portfolio of assets to the broker or the bank (managed management, mandated management), which then exercises the role of agent for the investor's account.

Make money with stocks

Investors can earn income from their shares in two ways:

• The dividend that is paid by the company issuing the securities, is in the form of a sum of money. The dividend payment takes place once or twice a year in general but is not mandatory for the company. The latter can very well abstain from paying it to devote part of its profits to its development;
• The capital gain on the resale of its shares. It is necessary to resell the action for more expensive than what one paid for its acquisition.