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Market Overview

Middle East ETFs and Iran


While the hotspot that is Yemen continues with its fighting among and bombings from Saudi Arabia, there is some hope in the region. The early blueprints of a nuclear deal between Iran and other nations have been hammered out in hopes it leads to a long-term solution in the Middle East. With increased Iranian cooperation comes a possible lifting of export sanctions, which could push the price of oil price lower with more oil hitting the market.

A completed deal between Iran and the six world powers could ultimately reduce the perceived Middle East investment risk, thus helping neighboring countries such as the United Arab Emirates, Qatar, and Kuwait, among others to obtain more foreign investment.

Dubai's main index gained 1.5 percent on Sunday, its largest move in three weeks following the news of the Iranian deal. Iran is the UAE's fourth-largest trading partner with the total near $32 billion.

Related Link: A Nuclear Energy ETF To Look At Amid Iran Agreement

Highlighted below are several Middle East ETFs available to U.S. investors.

The iShares MSCI UAE Capped ETF (NYSE: UAE) provides investors exposure to 25 holdings in the UAE across five sectors, with the most weighted sector being the financials at 68 percent. The top individual holdings include Emaar Properties PJSC, First Trust Bank PJSC and DP World Ltd.

UAE was launched on April 29, 2014, and is down 25 percent since its inception as well as down 21 percent over the last six months, and down 1 percent year-to-date. The ETF has an expense ratio of 0.62 percent.

The Market Vectors Gulf States ETF (NYSE: MES) tracks the performance of the 63 largest and most liquid companies in the Gulf Cooperation Council (GCC), which includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE. The top individual holdings include Emaar Properties Pjsc, National Bank Of Kuwait and Bankmuscat Saog.

MES is down 14 percent over the last 12 months, down 18 percent over the last six, and up 3.4 percent year-to-date. The ETF has an expense ratio of 0.98 percent.

The WisdomTree Middle East Dividend ETF (NYSE: GULF) consists of 74 companies throughout eight Middle East countries. Qatar at 33 percent and the UAE at 29 percent are the most heavily weighted countries. The top holdings include Industries Qatar, First Gulf Bank PJSC and Qatar National Bank SAQ.

GULF is down 13 percent over the last 12 months, down 16 percent over the last six months and flat year-to-date. The Middle East ETS has an expense ratio of 0.88 percent.


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