The band-aid solution? Saudi stocks jump on King Salman's salary bonus

Stock prices in Saudi Arabia climbed the most in six weeks after Custodian of the Two Holy Mosques King Salman announced bonuses for civil servants worth billions of dollars, a week after succeeding to the throne. Saudi stock benchmark Tadawul All Share Index advanced 2.99 percent on Sunday to close at 9,143.93 points.

The new king also replaced key security and economic officials and made changes to some government bodies and allocated additional grants for the Ministry of Social Affairs and other agencies.

“It’s a reaction to the royal decree that came out last week,” Mohammed Al-Suwayed, a Riyadh-based financial analyst and partner at market-analytics company SPT Investors LLC, said. Investors have also “reacted positively” to the appointment of Mohammed Al-Jadaan as head of the Capital Markets Authority, Al-Suwayed said.

Saudi Basic Industries Corp., the petrochemicals maker with the second-biggest weighting on the index, rose 7.5 percent to the strongest level in almost two months. Al Rajhi Bank, the largest Islamic lender in the world, jumped 4.1 percent.

Elsewhere, Dubai stocks advanced the most in six weeks after oil rallied on signs a price slump will curb output. 

The DFM General Index added 4.5 percent, the most since Dec. 21, to close at 3,840.22. Abu Dhabi’s ADX General Index climbed 2.2 percent, its first increase in five days, and Qatar’s QE Index gained 1.4 percent, the strongest close since Jan. 8. 

Brent crude, the benchmark for more than half the world’s oil, surged the most in almost six years on Jan. 30 after Baker Hughes Inc. reported that the US rig count fell to a three-year low. The Organization of Petroleum Exporting Countries, of which four of six Gulf Cooperation Council states are members, has maintained output amid the lowest prices since 2009, challenging the growth in US production.

“Oil price volatility is still the main driver in the regional markets,” Wadah Al Taha, chief investment officer of Dubai-based Al Zarooni Group, said by phone today. “It’s a combination of a substantial jump in crude prices last week and some good numbers we’re seeing by United Arab Emirates companies.”

Dubai Investments PJSC soared 14 percent, the biggest increase since Dec. 21, after reporting a more than 60 percent jump in full-year profit. The investment company’s board proposed a 12 percent cash dividend and 6 percent bonus shares.

Emaar Properties PJSC, developer of the Burj Khalifa, the world’s tallest tower in Dubai, advanced 6.6 percent. 

Crude, which fell into a bear market last year, surged 7.9 percent to $52.99 a barrel on Jan. 30. It had the best weekly performance since February 2011.

Kuwait’s SE Price Index added 1 percent and Oman’s MSM 30 Index climbed 0.2 percent, while Bahrain’s BB All Share Index slid 0.5 percent. Egypt’s EGX 30 Index dropped 0.6 percent.

Iraq’s benchmark ISX General Index dropped 1.7 percent to a record. The gauge has declined for 16 days, slumping 34 percent in the period.