Saudi stocks plunge as Trump vows punishment over Khashoggi fate

Saudi Arabia stocks plunge as concerns rise over US measures against the kingdom. (Bloomberg pic)

DUBAI: Saudi Arabian equities slumped on concern the US may take measures against the kingdom if it’s linked to the disappearance of Washington Post writer Jamal Khashoggi.

The Tadawul All Share Index plummeted 6.3% as of 11.34am in Riyadh, the most since August 2015 on a closing basis, as all but three of the gauge’s 186 members declined. Saudi Basic Industries Corp. and Al Rajhi Bank were the biggest drags on the measure.

President Donald Trump said the US could take “very, very powerful, very strong, strong measures” against the kingdom if its leaders are found responsible for the Saudi citizen’s fate. Still, Trump said the US would be “foolish” to cancel large arms deals with the Gulf state.

“You are talking about geopolitical situation becoming even worse and Saudi Arabia is going to show its stubborn attitude again,” said Naeem Aslam, the chief market analyst at Think Markets UK in London. “This is not going to sit well with foreign investors. From where we sit, we don’t see any demand for Saudi equities at all.”

The Tadawul’s main index has erased its year-to-date gain amid a four-day sell-off, sinking to the lowest level since December. Sabic declined 8.3%, Al Rajhi lost 3.7% and National Commercial Bank plunged 7.2%.

Saudi Arabia has denied any involvement in Khashoggi’s disappearance. In the absence of any information of his whereabouts, some company leaders have backed away from the “Davos in the Desert” event later this month intended to showcase Prince Mohammed bin Salman’s modernization plan for his nation.

“Saudi is one of the world’s top oil producers, so one can’t sanction Saudi in the same way that one could sanction Iran,” Richard Sneller, the head of emerging-market equities at Baillie Gifford & Co. in Edinburgh, said last week. “Having said that, there are aspects of the Saudi regime that some people find less palatable and there are competing interests within Saudi as well. This is a very complicated country.”