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The main stock index in Riyadh fell 7% Sunday and billions of dollars have been wiped out of the value of the major Saudi companies. The index found a bit of ground later to close at 3.5%.
According to a UN report released earlier this year, foreign direct investment in Saudi Arabia fell to 1.4 billion dollars in 2017, the lowest level in 14 years.
Nevertheless, the Saudi economy was recovering from a recession and investors were encouraged earlier this year when the MSCI index compiler gave the country the status of emerging market. This means that shares traded in Saudi Arabia can now be included in larger funds, allowing investors around the world to more easily place their money in the kingdom's economy.
But the unexplained disappearance of Khashoggi, a former Saudi government advisor who has become critical, has already prompted some of the world's leading business partners to sever ties with projects essential to the Saudi project to build a modern, technology-based economy.
"What would have happened in Turkey (…) if it turned out, would clearly change the ability of each of us to do business with the Saudi government," he said in a statement.
"The markets are starting to incorporate a fundamental shift in the nature of the relationship between the United States and Saudi Arabia," said Jaap Meijer, general manager and head of equity research at Arqaam Capital. "We think this is not justified given the long-term relations between the two countries, and Saudi is the swing oil producer."
Saudi Arabia is injecting more oil into world markets to offset the deficit created by Trump's decision to reimpose sanctions on Iran.
There are now doubts about the participation of US Treasury Secretary Steven Mnuchin at the Riyadh conference. At the closing press conference of the International Monetary Fund meeting in Bali, Indonesia on Saturday, he declared that he was still planning to continue.
But speaking later in the day at the Oval Office, Secretary of State Mike Pompeo did not confirm that Mnuchin would participate in the Future Investment Initiative.
"I think we need to continue to evaluate the facts and we will make that decision," he said.
The BBC reported Sunday morning that the British Secretary of Commerce, Liam Fox, could also withdraw.
