Saudi Arabia: Shia arrest spooks stocks | beyondbrics – FT.com

The arrest of a prominent Shia cleric and the prospect of demonstrations in Saudi Arabia, the world’s largest oil exporter, has spooked the local Tadawul stock exchange.

The Tadawul, the largest stock market in the Arab world by capitalisation, plunged 6.78 per cent to 5,538.72 on Tuesday, bringing its decline for the year to date to 16.34 per cent.

Reassurances from the finance ministry that a $35bn welfare spending boost announced last week by King Abdullah did nothing to calm investors’ nerves. The fear of political contagion, it seems, have gripped the kingdom.

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