The Dubai Financial Market fell almost seven per cent to 3,451.48 points, while Saudi Arabia's benchmark exchange was also down seven per cent to 7,441.33 points.
This week fears around a China-led global economic slowdown ripped through international markets with shares in Europe, London and New York all suffering. Emerging market stocks were also hit as the turmoil played into concerns that the Fed is preparing to hike rates and low oil prices.
Read more: Isis fight sends Iraq to debt markets
Fitch cut its outlook for Saudi Arabia's foreign and local currency issuer default ratings to "negative" from "stable" on Friday. The credit ratings agency cited low global oil prices as well as increased spending associated with the accession of a new king.
The collapse of brent, the global oil benchmark, from about $107 per barrel in June last year to around £45 per barrel today had eaten into Saudi Arabia's income. This is despite the Kingdom's attempts to diversify its economy towards non-oil sectors such as finance, manufacturing and infrastructure.