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Saudi- Tadawul rises 32 as lavish payout boosts market
(MENAFN- Arab News) Saudi Arabia's stock market rose sharply on Sunday after Custodian of the Two Holy Mosques King Salman ordered a lavish payout to state employees and oil prices jumped on reports of declining US drilling activity.
Tadawul All-Share Index jumped 3.0 percent in heavy trade to 9144 points.
Most other Gulf markets also climbed in sympathy.
A key factor for the market's optimism was King Salman's recent order for the immediate payment of two months of bonus salary to all state employees and pension to retired government workers.
The salary payout alone could be worth up to around SR70 billion ($18.6 billion) about 8 percent of the original state budget for 2015 or 2.5 percent of last year's gross domestic product.
Additional state spending was allocated to students civic and professional associations around the country and upgrading electricity and water services.
An informed source said the two-month bonus for government employees would be distributed within two weeks.
The move could boost Saudi Arabia's gross domestic product by 0.75 percent this year said John Sfakianakis Middle East director at Ashmore Group. 'Moreover most private sector companies have announced similar one off packages and would nearly double the impact on consumption' he told Arab News.
'We are talking about more than 2 million Saudis who will benefit from such private sector announcements and more than 2.5 million civil servants and military personnel. The impact is substantial in GDP terms' he said.
Retailers will be the first sector to benefit from it he said.
Stocks in the sector were among top gainers in on Sunday's trading.
The market surged as local media reported that the government is likely to privatize the Financial Market Company (Tadawul) by selling part of its shares to citizens and investment funds
'The Saudi government owns a number of companies that can be privatized and I believe they are likely to float shares of Tadawul shortly for public subscription' the source told Asharq Al-Awsat.
Tadawul has a capital of SR1.2 billion.
Tadawul which is fully owned by the state has been making efforts to adopt the latest electronic systems to improve its services.
Tadawul All-Share Index jumped 3.0 percent in heavy trade to 9144 points.
Most other Gulf markets also climbed in sympathy.
A key factor for the market's optimism was King Salman's recent order for the immediate payment of two months of bonus salary to all state employees and pension to retired government workers.
The salary payout alone could be worth up to around SR70 billion ($18.6 billion) about 8 percent of the original state budget for 2015 or 2.5 percent of last year's gross domestic product.
Additional state spending was allocated to students civic and professional associations around the country and upgrading electricity and water services.
An informed source said the two-month bonus for government employees would be distributed within two weeks.
The move could boost Saudi Arabia's gross domestic product by 0.75 percent this year said John Sfakianakis Middle East director at Ashmore Group. 'Moreover most private sector companies have announced similar one off packages and would nearly double the impact on consumption' he told Arab News.
'We are talking about more than 2 million Saudis who will benefit from such private sector announcements and more than 2.5 million civil servants and military personnel. The impact is substantial in GDP terms' he said.
Retailers will be the first sector to benefit from it he said.
Stocks in the sector were among top gainers in on Sunday's trading.
The market surged as local media reported that the government is likely to privatize the Financial Market Company (Tadawul) by selling part of its shares to citizens and investment funds
'The Saudi government owns a number of companies that can be privatized and I believe they are likely to float shares of Tadawul shortly for public subscription' the source told Asharq Al-Awsat.
Tadawul has a capital of SR1.2 billion.
Tadawul which is fully owned by the state has been making efforts to adopt the latest electronic systems to improve its services.
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