A view of the Dubai Financial Market (DFM)
An opening up for the global economy could mean a boost for UAE stocks, especially those with a hospitality or transportation exposure. Image Credit: Gulf News Archive

Dubai: It can be said that Dubai stocks will be in play right from the reopening of the global economy.

DFM as well as ADX stocks are likely to see a rise in foreign investments, particularly blue-chip companies exposed to hospitality and transportation sectors. Both indices are above their key support levels of 2,000 and 4,240 points, respectively.

The case for Dubai stocks is also strengthened by a rise in global liquidity and part of it is bound to end up in UAE. On DFM, Air Arabia and DXB Entertainments are direct beneficiaries of reduction in travel and movement restrictions. Financial institutions will benefit if they can see off the year without a major rise in non-performing assets.

Creating a free for all

Let’s take a detour from the UAE and have a look at Robinhood, the discount brokerage firm that offers commission-free trading to clients. The firm primarily makes money by directing its trade flow to different parties, including market markers who fulfill its trade flow order execution, and also by charging holding rates on clients’ overall equity deposits.

A 20-year old trader committed suicide after he saw a $700,000 plus loss on his options position executed through the platform. He had apparently bought put options and sold shares of equal quantity, which he thought would have nullified his overall risk.

A close look at this incident puts into question about broker safeguards as well as the product process itself on Robinhood. The company is now said to revamping its entire advertising and the selling of such products, as well as the client on-boarding process.

But its client base is known for investing big on stocks with poor fundamentals. Its platform has suffered a number of outages owing to market volatility and given the heavy investor participation, there could be a lot more pain ahead.