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Abu Dhabi, UAESunday 24 June 2018

Saudi decision on women driving is a good sign for investors

Saudi Arabia is in the market to sell dollar bonds today, its second this year

Allowing women to drive shows Saudi Arabia is serious about reform. Faisal Al Nasser/Reuters
Allowing women to drive shows Saudi Arabia is serious about reform. Faisal Al Nasser/Reuters

Allowing Saudi women to drive is a landmark decision for the kingdom - and it is great timing, too.

Saudi Arabia is in the market to sell dollar bonds today, its second this year. The decision to lift a ban that activists have fought for decades is a sign the kingdom is serious about transforming its society as part of a larger drive to diversify the Arab world’s biggest economy away from oil.

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“In terms of achieving one of the goals of the economic reform plan [increasing female participation in the workforce], lifting the ban on driving is a big step in the right direction,” said Khatija Haque, the head of research for the Middle East and North Africa at Emirates NBD. “It’s also a signal to investors, ahead of the upcoming bond issue, that the authorities remain committed to implementing their ambitious economic reform agenda, even though visible progress has been a little slow in recent months.”

For Michael Cirami, the Boston-based money manager at Eaton Vance Management who oversees about US$13bn of assets, the change improves his outlook on Saudi Arabia, but says he will be looking out for a backlash.

“It will be an important indicator to watch,” he said.