Tadawul trading screen 

Analysts surveyed by Argaam said that the market experienced negative performance last week, with the Tadawul All Share Index (TASI) dropping by 4% year to date. This drop is attributed to pressures from IPOs, falling oil prices, the Federal Reserve meeting, and pre-Eid Al-Adha selling.

Analysts expect the market to recoup losses after the Eid holiday, backed by positive second-quarter results and higher oil prices. The market is likely to break 12,200 points by the end of July.
George Pavel, General Manager of Capex.com Middle East
George Pavel, General Manager of Capex.com Middle East, stated that the Saudi market ended in the red territory last week after starting the week on a positive note. The market retreated after hitting the resistance level at 11,900 points. This came after Aramco's stock positively influenced the market on the first trading day, alongside a recovery in oil prices. However, traders' caution before the Fed meeting weighed on the market.
 
Pavel explained that the Federal Reserve's stance negatively impacted market sentiment, despite a positive decline in the inflation index, further dragging down the Saudi market on Thursday. Additionally, the end of the week's session saw sell-offs before the Eid al-Adha holiday, with the market being closed for a week. This reflects a dampened market sentiment after betting on a positive outcome from the US central bank meeting.
Hesham Abou Jamee, CEO of Mekyal Financial Technologies
Hesham Abou Jamee, CEO of Mekyal Financial Technologies, pointed out that the market witnessed unprecedented events in the past two weeks as a large number of companies listed within just two weeks with a market value exceeding nearly SAR 25 billion. The market also witnessed the secondary offering of Saudi Aramco, which raised about SAR 42 billion.
Year to date, the market closed 4% down on Thursday, Abou Jamee said, expecting the market to rebound once the IPO pressures subside.
Bassam Al-Obaid financial markets expert
On the other hand, financial markets expert Bassam Al-Obaid, said that market liquidity in the last session declined compared to previous days. Still, the liquidity outflows remained higher than inflows, keeping the market in a downward correction wave.
Technical Market Performance
Abou Jamee predicted that the market would maintain its positive trend in the coming weeks, regaining most of its losses since the beginning of the year. He expects the market to break the 12,200 -12,500 point range before the end of July, driven by banking support and the positive second-quarter financial results.
On the technical level, Pavel said that TASI hit a weekly peak of 11,954 points on June 10, before closing below the resistance level of 11,900 points. The market's halt at 11,900 points indicates that the downward trend may persist and that the market sentiment is still negative, potentially leading to further sell-offs.

Pavel added that if these pressures continue, support levels may remain at 11,450 points, followed by 11,250 and 11,000 points. However, if the index rebounds, it may face resistance at the 11,900, 12,000, and 12,200 point-levels.

 

On the other hand, Al-Obaid noted that the market is only moving sideways between 11,450 and 11,950 points. The higher point forms a resistance zone, while the lower forms a support.

 

Breaking the support could push the market to 11,250 points, representing 61% of the entire wave the market has started since the end of 2023.

 

If the index goes beyond 11,950 points, the market could head towards 12,300 points, which marks a very strong resistance zone, expecting increased support to 450 points on pressures from oil prices and other factors.

 

Sector Performance

 

Al-Obaid highlighted that the energy sector is the biggest decliner among peers. The banking sector is the most likely to recover among peers after Eid, but may need some time. This, however, depends on the end of the current correction.

 

He added that the banking sector might respond to expectations of imminent interest rate cuts by the Federal Reserve in the second half of the year.

 

On the other hand, Pavel said that sector performance was mixed, with both banking and energy negatively weighing on the market due to the weights of companies like Aramco and Al Rajhi Bank. Utilities was one of the worst performers, hurt by companies like ACWA Power.

 

Pavel expects the energy sector to be among the most affected after the Eid holiday, as strong oil price rebounds could impact energy companies and overall market sentiment.

 

The market saw the debut of three companies on the Main Market, including Al Taiseer Group Talco Industrial Co. (TALCO), and Rasan Information Technology Co., bringing the number of new entrants on TASI to eight YTD.

 

As the Saudi market continues its IPO momentum, increasing market liquidity and size, this reflects growing investor confidence in the market. Continued demand and successful IPOs also contribute to market growth, aligning with the Kingdom's strategic plans and objectives.

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