The Saudi stock market plunged Sunday after President Donald Trump threatened “severe punishment” over the disappearance of Washington Post contributor Jamal Khashoggi.
The Tadawul exchange in Riyadh dropped over 6 percent in the week’s first day of trading, with 182 of its 186 listed stocks showing losses by the early afternoon.
Turkish officials say they fear Saudi agents killed and dismembered Khashoggi after he entered the Saudi Consulate in Istanbul on Oct. 2, saying they have audio and video recordings of it that they have not released. The kingdom has called the allegations “baseless,” but has offered no evidence the writer ever left the consulate.
In an interview to be aired Sunday, Trump told CBS’ “60 Minutes” that the consequences of Saudi Arabia being involved would be “severe.”
“There’s something really terrible and disgusting about that, if that was the case, so we’re going to have to see,” Trump said. “We’re going to get to the bottom of it and there will be severe punishment.”
However, Trump in the same interview said: “As of this moment, they deny it and they deny it vehemently. Could it be them? Yes.”
Saudi officials had no immediate comment on the selloff, though state television aired an interview with an analyst who blamed it on weaker markets in the U.S. However, other stock exchanges in the Mideast saw far less volatility Sunday. U.S. markets have been rattled by rising interest rates, signs of a slowdown in the global economy and the U.S.-China trade dispute.
Saudi Crown Prince Mohammed bin Salman has aggressively pitched the kingdom as a destination for foreign investment. But Khashoggi’s disappearance, and suspicions he may have been targeted over his criticism of the crown prince, have led several business leaders and media outlets to back out of an upcoming high-profile investment conference in Riyadh.
Trump also said “we would be punishing ourselves” by canceling arms sales to Saudi Arabia, which his administration touted on his first overseas trip. The sale is a “tremendous order for our companies,” and if the kingdom doesn’t buy its weaponry from the United States, they will buy it from others, he said. Trump said he would meet with Khashoggi’s family.
American lawmakers in both parties have been more critical of Saudi Arabia, with several suggesting officials in the kingdom could be sanctioned if they were found to be involved in Khashoggi’s disappearance and alleged killing.
Khashoggi, who was considered close to the Saudi royal family, had become a critic of the current government and Prince Mohammed, the 33-year-old heir apparent who has shown little tolerance for criticism.
As a contributor to the Post, Khashoggi has written extensively about Saudi Arabia, including criticism of its war in Yemen, its recent diplomatic spat with Canada and its arrest of women’s rights activists after the lifting of a ban on women driving.
Those policies are all seen as initiatives of the crown prince, who has also presided over a roundup of activists and businessmen.