Saudi investors worried about deteriorating relations with the international community after the disappearance of Saudi journalist Jamal Khashoggi.
Saudi Arabia's stock market plunged on Sunday as investors worried about deteriorating relations with the international community after the disappearance of Saudi journalist Jamal Khashoggi.
After nearly two hours of trade the index was down 7.0 percent, its biggest drop since December 2014, when oil prices were crashing. Shares in the region's biggest petrochemical producer, Saudi Basic Industries, tumbled 7.9 percent.
"It’s the political environment. The market is reacting negatively to sentiment around the Khashoggi case and the political noise around it," said Salah Shamma, head of investment for the region at Franklin Templeton Emerging Markets Equity, a big global fund manager.
Shamma noted the fundamental situation of the Saudi economy had not so far been affected.
But regional traders said speculation the Khashoggi case might deter some inflows of foreign investment - and that a backlash in the U.S. Congress could lead to U.S. sanctions against some Saudi individuals - had triggered panic selling of stocks by some local investors.
"It seems that international accounts are punishing the Saudi exchange," a regional broker added.
Saudi Arabia must cooperate with the investigation into the disappearance of Saudi journalist Jamal Khashoggi and allow Turkish officials to enter its Istanbul consulate, Foreign Minister Mevlüt Çavuşoğlu said on Saturday.Çavuşoğlu was speaking to reporters during a visit to London, after a delegation from Saudi Arabia arrived in Turkey for a joint investigation into Khashoggi's disappearance."There is consensus on forming a joint working group with Saudi Arabia over missing journalist Khashoggi," Çavuşoğlu said.Trump says Saudi Arabia faces 'severe punishment' if Khashoggi was killed"It is natural for everyone to show awareness of the case and want it to be clarified," he added.On the same day that the Saudi journalist arrived at the consulate, 15 other Saudis, including several officials, arrived in Istanbul on two planes and visited the building while Khashoggi was also inside, police sources said. All of the identified individuals have since left Turkey.Saudi authorities have yet to give a clear explanation of Khashoggi’s fate, while several countries -- particularly Turkey, the U.S., and the U.K -- are pressing the case to be cleared up as soon as possible.Disappearance of Khashoggi cannot be covered up: AK Party spoxTurkey obtains recordings of Saudi journalist's purported killing
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Khashoggi, a prominent critic of Riyadh and a U.S. resident, disappeared on Oct. 2 after visiting the Saudi consulate in Istanbul. Turkey believes he was deliberately killed inside the building and his body removed. Riyadh has dismissed the claims.
U.S. President Donald Trump said on Saturday there would be "severe punishment" for Saudi Arabia if it turned out that Khashoggi was killed in the consulate.
Media companies and some technology executives have pulled out of a major Saudi investment conference scheduled for next week in Riyadh because of growing outrage over the disappearance.
Other stock markets in the Gulf opened higher on Sunday but began falling as Riyadh plunged, with the Dubai index sinking 1.4 percent.
U.S. President Donald Trump said on Saturday that the United States would be "punishing itself" if it halts military sales to Saudi Arabia, even if it is proven that Saudi journalist Jamal Khashoggi was killed inside the country's consulate in Istanbul.Khashoggi, a prominent critic of Riyadh and a U.S. resident, disappeared on Oct. 2 after visiting the consulate. Turkey's government believes he was deliberately killed inside the building and his body removed.Trump has forged closer ties with Saudi Arabia and is under international and domestic pressure to help determine what happened to Khashoggi and punish Saudi Arabia if investigations show its government had him killed.Some U.S. lawmakers have said Washington should block military sales to Riyadh if the allegations are proven. But Trump is opposed."I actually think we’d be punishing ourselves if we did that," Trump told reporters at the White House on Saturday."There are other things we can do that are very, very powerful, very strong and we’ll do them," he added, without saying what those measures might be.Trump says Saudi Arabia faces 'severe punishment' if Khashoggi was killedDisappearance of Khashoggi cannot be covered up: AK Party spoxUS congressmen seek support for Khashoggi intel release
Trump says US would be 'punishing itself' if it halts Saudi arms sales