DUBAI, Sept 27 (Reuters) - Saudi Arabia’s stock market may get a boost on Wednesday from news that women will be allowed to drive cars for the first time; the move sends a strong signal that economic reform plans are moving ahead.
Saudi King Salman on Tuesday issued a royal decree that will be implemented by June 24, 2018, according to state news agency SPA.
There are about 10 million women, including foreigners, over the age of 20 living in the kingdom, according to the official statistics bureau. This makes them a potential new source of revenue for banks, because of car loans, and insurance companies, through auto insurance.
Shares in car servicing company Saudi Automotive Services may attract interest. Most of the large auto dealers, however, are privately held companies, including Abdulatif Jameel, which owns Toyota in kingdom.
In the long term, hundreds of thousands of foreign chauffers may leave Saudi Arabia because they are no longer needed, which could in itself be negative for the economy. But their departure would reduce remittances out of the country, improving its external balance, so the net economic effect may be positive.
Lifting the driving ban could also help increase women’s employment, a positive for domestic demand.
Another positive for the Saudi stock market and the Gulf generally on Wednesday is that Brent crude oil overnight hit $59.49 a barrel, its highest since July 2015 and more than 34 percent above a 2017 low.
In Qatar, Commercial Bank may be pressured by news that it is in talks to sell its $217 million stake in Abu Dhabi-listed United Arab Bank, joining several Qatari companies exiting the United Arab Emirates because of the diplomatic rift in the Gulf. (Reporting by Celine Aswad; Editing by Andrew Torchia)