Handouts to citizens to support consumer spend in Saudi: NCB Capital

King Salman’s decree to pay a cost of living allowance, in addition to the Citizen’s Account program and the annual increment, will be equivalent to a three-month salary increase for public servants in 2018, NCB Capital said in a recent report.

The move is expected to improve consumer spending levels, it added.

“We believe these allowances will have a net direct positive impact on around 5 million Saudis,” the brokerage said.

While the Saudi stock market reacted positively after previous direct bonus payments in 2011 and 2015, the reaction to the latest hand-outs was neutral, thereby offering attractive entry points, especially in the retail, capital goods, materials (cement) and real estate sectors.