DUBAI, April 23 Saudi Arabia's stock market is
set to get a boost on Sunday, improving sentiment in other
regional markets, after King Salman issued a royal decree on
Saturday restoring financial allowances for Saudi civil servants
and military personnel.
The allowances had been cut last September as part of
austerity measures due to low oil prices; officials said on
Saturday that the cuts had been cancelled because of
better-than-expected budgetary performance in the first quarter
One local economist had estimated the government would save
about 50 billion riyals ($13.3 billion) annually with last
September's pay cuts, so their cancellation could give the
economy a significant boost.
However, it seems likely that the government will remain
very cautious in hiring and using overtime, and new austerity
steps loom, including the introduction of a tax on tobacco and
sugary drinks - projected to raise up to 10 billion riyals -
this quarter and the imposition of value-added tax next year. So
there may not be a sustained surge in consumer spending.
The Saudi stock index, last at 6,899 points, faces
technical resistance at the April peak of 7,107 points.
Retailer Fawaz Al Hokair is one company that could
benefit from the civil servant pay news. On Sunday it reported
fourth-quarter net income of 79.35 million riyals, up from 3.17
million riyals a year earlier, citing cost-cutting. But sales
dropped 6.3 percent to 1.42 billion riyals.
The global market environment is mildly negative for Middle
Eastern stocks; MSCI's gauge of stocks across the globe
fell 0.2 percent on Friday while Brent crude oil
slipped back to around $52 a barrel.
United Arab Emirates markets are closed on Sunday for a
(Additional reporting by Celine Aswad; Reporting by Andrew