Refusing to be cowed by a flurry of cancellations that have effectively gutted Riyadh’s Future Investment Initiative – colloquially known as “Davos in the Desert” – Saudi Arabia has lashed out at the US and its Western allies, warning that there will be hell to pay if anybody dares sanction the world’s largest oil exporter. If Mr. Trump is bothered by oil prices at $80 a barrel, the Saudis have wagered, imagine how uncomfortable he would be with oil at $200 a barrel? Already, oil traders have recognized Saudi’s “weaponization” of OPEC’s ability to control global oil supplies, while Saudi’s Tadawul stock exchange plunged 8% at the lows on Sunday (though this drop was mitigated in part by a late-session rebound).

But the tentacles of capital emanating out of Riyadh stretch across the world, to Tokyo and San Francisco and beyond, what one NYT op-ed writer described as Silicon Valley’s “Saudi Arabia problem.” And nowhere is this link more evident than with Tokyo-traded Softbank, whose shares have born the brunt of investors’ indignation over the burgeoning diplomatic crisis (a crisis rooted in Saudi Arabia’s suspected murder of a former-insider-turned-dissident-journalist inside the Saudi consulate in Istanbul). Softbank shares closed more than 7.3% lower on Monday in Tokyo, a move that analysts partly attributed to the instability surrounding Saudi Arabia. Since Softbank’s September peak, the company has shed more than $22 billion in market capitalization, according to BBG data.

A pullback in tech shares like Nvidia, in which Softbank owns a major stake, has helped weigh on Softbank shares as one BBG columnist calculated that SB’s Nvidia stake was “the major factor” driving Softbank’s profitability last year.

Just like the broader market, the pullback in tech was inspired, at least in part, by anxieties surrounding the US-China trade war. But its Saudi ties are increasingly becoming an intolerable risk in the eyes of investors.

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