Saudi Stocks Rally as Return of State Bonuses May Boost Spending

  • The main equity gauge rises most in more than three weeks
  • Tadawul Retailing Index biggest gainer on percent basis

Saudi Arabia Plans More Bond Sales

Saudi Arabian stocks advanced the most this month on optimism consumer spending will increase after King Salman restored bonuses and allowances for state employees.

The Tadawul All Share Index climbed as much as 1.7 percent, before paring the gain to 1 percent at the close in Riyadh. The Tadawul Materials Industry Group was the biggest contributor to the gain, while the Tadawul Retailing Index soared the most since January 2016 and was the best performer on a percent basis.

The king reinstated the bonuses, which had been canceled in September, after revenue increased and an unprecedented economic overhaul helped narrow the budget deficit. The announcement came hours before the Middle East’s biggest bourse implemented rules to allow short-selling and shifted its settlement cycle to T+2, bringing the exchange in line with international peers.

Read More: King Scales Back Austerity Plan That Set Saudis Grumbling

The exchange in 2015 allowed investors abroad to trade shares directly for the first time. Even after the government further eased the requirements to access the market last year, foreigners hold less than 5 percent of the total market capitalization.

The kingdom is seeking inclusion in MSCI Inc.’s emerging-market index, which is tracked by fund managers globally, to boost trading. It’s also planning what could be the world’s biggest initial public offering when it sells shares in oil giant Saudi Arabian Oil Co., also known as Saudi Aramco.

Cheap Loans

Saudi Arabia may offer “almost interest-free” loans to companies in labor-intensive industries and may tap the international debt market again this year to finance its budget gap, Finance Minister Mohammed Al-Jadaan said in an interview. Austerity and low oil prices have led to the worst economic slowdown since the global financial crisis.

Jarir Marketing Co. jumped 8.2 percent, the most since January 2016. It was the biggest contributor to gains on the benchmark index.

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