Tadawul's recent decline is part of correction: analysts

The market witnessed an unjustified panic period, as all impactful economic factors are positive, analysts said, pointing out that the investors and traders had exaggerated reactions to recent geopolitical events.

The benchmark will likely bounce to 8600 points after reaching levels beyond 7550 points, they added.

The market’s uptrend, which started at 7586 points and reached 9403 points was led by specific sectors such as the banking, telecom, and petrochemicals sectors, so trading was weak compared to the overall rose of market sectors, technical analyst Saad Al Saad told Argaam.

Tadawul is impacted by many events such as the US-China trade war and the region’s geopolitical situation, which accelerates price movement and causes sharp fluctuations, he said.

Al Saad expects the market to bounce from the 8200 or 8000 levels towards the 8800 points, then decline again to the 8200 mark. 

Meanwhile, analyst Emad Al-Rashid also said that Tadawul had an exaggerated sharp reaction to geopolitical events. Despite the over 1000-point drop from the peak of 9400 points in May, this is considered a healthy correction for the market, which rose on Oct. 14, 2018 by around 31 percent. It is natural to decline by 11 percent from that peak.

The market is currently on the verge of breaking the 8200-points level, and if that happens it would be a negative sign of breaking an important support barrier, which is the 8000 points, and TASI’s direction towards the 7850 points then the 7550 points to correct the current trend, he added.

"The panic in the Saudi market is unjustified, as all the economic factors affecting the Saudi market economy are positive. The correction is inevitable and once the negative wave ends, the market will return to the positive levels by breaking the 8600 level to reach again the 9000-mark, and achieve the target of 10,000 points," he added.