King Abdullah of Saudi Arabia promised to create a risk-free investment fund for ordinary Saudis yesterday as the Gulf kingdom's collapsing stock market experienced another sharp fall.

The Tadawul All-Shares index was down 9.7 per cent by yesterday afternoon, exacerbating a collapse that has ruined tens of thousands of Saudi investors, who had been encouraged by the authorities to ride the stock markets as a means of spreading wealth generated by the oil boom.