DUBAI, Jan 7 (Reuters) - Saudi Arabia’s stock market rose in early trade on Sunday after King Salman announced a package of handouts for Saudi citizens to compensate them for the rising cost of living, while several blue chips boosted Qatar’s market.
The Saudi index gained 0.5 percent in the first hour as real estate developer Dar Al Arkan, the most heavily traded stock, added 2.4 percent. Among the handouts, the government will bear the cost of value-added tax for purchases of first homes by Saudi citizens.
The information minister was quoted by the Saudi-owned Al Sharq Al Awsat newspaper as saying the cost of the handouts would total about 50 billion riyals ($13.3 billion), while an additional 30 billion riyals would be spent on a previously announced aid programme for low- and middle-income Saudis.
The steps are unlikely to trigger a consumer boom; private economists have estimated the government will raise about 40 billion riyals in 2018 by introducing value-added tax, while gasoline price hikes that took effect this month are expected to cost consumers tens of billions of riyals.
Nevertheless, the handouts are a sign that Saudi authorities are keen to limit damage to domestic demand from this year’s austerity measures, and that rising oil prices are giving them the means to do so.
Shares in Saudi petrochemical producer PetroRabigh climbed 3.0 percent after the company said that of 12 units in its Phase II expansion, 10 had achieved production in line with specifications and the remaining two would start up in the current quarter.
Qatar’s index rose 1.1 percent on the back of stocks including Barwa Real Estate, which was the most heavily traded stock and gained 2.1 percent, and major Islamic bank Masraf Al Rayan, up 2.7 percent.
Other Gulf markets were sluggish despite strength in global equities. Dubai’s index was flat although builder Arabtec jumped 4.5 percent in heavy trade after saying one of its units had won a 250 million dirham ($68 million) contract for work from blue chip Emaar Properties. (Reporting by Andrew Torchia Editing by Jeremy Gaunt)