Saudi Arabia's record budget for 2011 will boost the kingdom's bourse in the long term as traders bet bumper spending will translate into higher corporate profits.
Analysts are bullish about Saudi Arabia's prospects, but some warn this year's spending -- also a record -- has had little impact on listed firms, while bank lending must also increase for the market to make a sustained rally.
'There's still a disconnect, but it probably takes time to trickle down to the private sector and with a continuation of spending it should filter through next year,' said Haissam Arabi, chief executive and fund manager at Gulfmena Alternative Investments.
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