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.

 

Expected impact on select sectors

Sector

Impact

Retail

Positive

Capital goods

Cement

Real Estate

Foods

Limited

Banks

Education

Healthcare

Petrochemicals

No impact

Insurance

Telecom

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