Abu Dhabi's Aldar Properties slumped to a five-year low on Sunday, extending declines since it unveiled a restructuring plan dilutive to minority shareholders. Middle East markets were mixed as Egypt, Qatar and Dubai made further losses, while Oman and Saudi Arabia edged higher.
Aldar fell 1.5 percent to 1.93 dirhams. The indebted developer's shares are down 15.4 percent since saying it would take $2.9 billion in impairments and issue a convertible bond to a government-owned investment vehicle, measures seen eroding shareholder value.
Rival Sorouh Real Estate dropped 0.7 percent. "Aldar opened the eyes of investors to think again about their investments in real estate companies in terms of the slowdown in the sector," said Mohammed Yasin, CAPM Investment chief investment officer.
"A lot of people have taken the decision to lower their equity exposure, if not exit entirely. If a company the size of Aldar has to take these sorts of steps, what about smaller developers?"
House prices in Abu Dhabi and Dubai are seen making further double-digit declines as over-supply weighs on valuations, a Reuters poll last week showed. Dubai prices are already about 60 percent below a 2008 peak.
"UAE markets will remain under pressure because of real estate - most listed companies are exposed directly or indirectly, whether they are developers, contractors or banks," said Shahid Hameed, Global Investment House head of asset management for the Gulf region. Cairo's index fell slightly, its fifth drop in six sessions after local activists, inspired by Tunisia's overthrow of its autocratic president, called a nation-wide protest against torture, poverty, corruption and unemployment for Tuesday, a national holiday that honours Egyptian police.
"Many investment firms have many sell orders from investors over fears the January 25 protest could lead to big political unrest," said Hisham Metwalli of Arab Finance Brokerage.
Industries Qatar fell 4 percent, its biggest drop since May 25, 2010, trimming its gains to 33 percent in three months. "Some foreign institutions took profits last week, but overall they were still net buyers in Qatar," said Hani Girgis, assistant chief dealer at Dlala brokerage.
Commercial Bank of Qatar dropped 2.2 percent and Barwa Real Estate lost 1.9 percent. "I wouldn't be surprised to see more profit-taking in Qatar over the next couple of weeks, but Qatar usually does well in the first-quarter because companies typically provide high dividend yields," said Global's Hameed.
Saudi Basic Industries Corp rose 1.2 percent, rebounding from Saturday's three-week low, and other bluechips also shrugged off initial declines to end higher. On Wednesday, SABIC made its largest decline in five months after its fourth-quarter profit missed estimates. "There is a lot of uncertainty and I'm not convinced by today's move - nothing fundamental has changed and it seems bargain hunters have stepped in after petrochemicals fell recently," said a Riyadh-based trader who asked not to be identified.
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