2 Min Read
DUBAI, April 23 (Reuters) - 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 of 2017.
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 public holiday. (Additional reporting by Celine Aswad; Reporting by Andrew Torchia)