Royal handouts may boost Saudi, global environment positive

DUBAI: A package of handouts from Saudi Arabia’s King Salman may boost the Saudi stock market while the region in general looks likely to be supported by a positive global trend.

King Salman on Saturday ordered extra monthly payments to state employees and pensioners this year as part of a package to compensate citizens for the rising cost of living after the government hiked gasoline prices and introduced value-added tax.

The decree did not say how much the package was worth; a central bank statement said it was “tens of billions of riyals”, and Reuters calculations suggested it might be around 23 billion riyals (US$6.1 billion) – smaller than some past handouts by Saudi kings, and not enough to make a big difference to the economy or the state budget deficit.

Nevertheless, the package is a sign that authorities aim to limit damage to domestic demand from austerity measures early this year, and could therefore buoy the stock market.

The Saudi stock index, last at 7,277 points, rose on Thursday above technical resistance around 7,200 points, which had capped it since mid-December; the next significant resistance is the September peaks around 7,400 points.

Overseas, the Dow Jones Industrial Average rose 0.9 per cent on Friday while MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.7 per cent higher. Brent oil fell but at US$67.62 a barrel, remained near 2-1/2 year highs. — Reuters