Economists have welcomed Saudi Arabia’s decision to change its weekend days, a move seen as boosting shares on the local financial market as well encouraging international trade.
Saudi Arabia is the last GCC country to shift its weekend to Friday and Saturday, and commentators say the decision is likely to strengthen its economic ties both regionally and globally.
The kingdom’s previous Thursday-Friday weekend meant that only three business days were aligned with most of the Western world.
Nasser Saidi, former Lebanese economic minister and former chief economist at the Dubai International Financial Center, forecasts a positive economic impact from the move.
“This is a welcome and long-overdue reform that will boost activity for business,” he told Al Arabiya. “The energy market on which the Saudi economy is highly dependent does not shut down and neither should Saudi.”
Saidi pointed out that the move gives a 20 percent increase in common working time with most international markets.
“By reducing transaction costs, increasing and standardizing market and economic opening times with the rest of the world, it will mean more trade in goods and services and investment,” he said.
Saidi, who is now president of Nasser Saidi & Associates, said that the weekend move could be a precursor to Saudi Arabia opening up its markets more widely.
Foreign investors are currently prohibited from investing directly in shares listed on the Saudi stock market, which is known as the Tadawul. But some industry analysts expect a liberalization of the rules soon.
“The hope is that [the weekend shift] is a harbinger of increased openness and pro-market oriented reforms,” said Saidi.
“The move will reduce volatility on the Tadawul market. Investors will welcome the change. More important is increasing opening hours: Saudi markets should be open 8am to 5pm in order to link with Asia and with Europe and the U.S.”
John Sfakianakis, the chief investment strategist of Masic, a Saudi Arabian family investment company, said the weekend shift “should enhance output and create less inefficiencies as… the stock market will be far more in sync with the rest of the world.”
This is likely to see the Saudi market move more in line with international trends – although that could be a mixed blessing.
“The only downside is that if there are significant downward pressures in global stock markets it would be felt far more quickly in Saudi Arabia than otherwise. The opposite is also true… If there are no global headwinds, the market should perform well,” Sfakianakis told Al Arabiya. “Being more in sync with the rest of the world has its consequences but the benefits far outweigh any inconsequential costs.”
Television schedules are likely to change with the shift in the weekend, said industry commentators.
Saudi Arabia attracts the lion’s share of the Gulf’s TV-advertising market, and some commentators said the shift in the weekend could see ad rates rise.
“Advertising will be better synchronized – now you’ll be hitting the weekend for all of the GCC. It is far more efficient advertising,” said Ali Ajouz, a Dubai-based media consultant.
“Overall, I think it’s a healthy move for everybody. I think the advertising industry will benefit. It might increase rates over the weekend.”
Trevor McFarlane, research director for the Middle East and Africa at Gulfstat, an independent economic research company, agreed that the change in weekend will have a positive impact.
“No longer will businessmen have to wait for Saudi to come online, allowing more opportunities to be exploited more quickly,” he said.
While the move is unlikely to attract new businesses to set up in Saudi Arabia, it is likely to make life easier for existing ones.
“I don't think the change in weekend will necessarily attract a wave of new businesses, rather it will simply make life a lot easier for those already doing business there. I don't think there were huge amount of businesses sitting on the sidelines because of the weekend issue,” McFarlane told Al Arabiya.
“Broadly speaking, the decree to change the weekend plays into the narrative that Saudi is serious about reforming its economy,” he added.