Middle East markets: Aldar at 23-month low

Abu Dhabi's Aldar Properties fell to a 23-month low on Thursday, extending losses since it unveiled a restructuring plan dilutive to shareholders and UAE markets remain weak as Aldar's precedent deters traders. Aldar, which has made losses for four straight quarters, dropped 1.5 percent to 2 dirhams, its lowest finish since February 4, 2009.
The developer's shares have fallen 12 percent since saying it would take $2.9 billion in impairments and issue a convertible bond to a government-owned investment vehicle. Abu Dhabi's government will also buy various assets from Aldar for $4.5 billion. "The way Aldar was resolved triggered negative sentiment in Abu Dhabi - investors didn't get the government support in the form they were hoping for Aldar," said Rami Sidani, Schroders Middle East head of investment.
"This is having a negative impact on other Abu Dhabi companies and the magnitude of future government support is being questioned - Aldar has set a precedent." Emirates Telecommunications Corp climbed 0.9 percent after a newspaper said the operator has a deadline of the end of January to complete due diligence on Zain. Etislat has provisionally agreed to pay $12 billion to buy a controlling stake in its Kuwait rival. Zain dropped 1.4 percent.
Etisalat's rise helped Abu Dhabi's index climb 0.3 percent and ease away from Wednesday's 15-week low, but Dubai's benchmark fell, taking its losses to 1.3 percent in 2011. It dropped 9.6 percent last year to be the worst performing Gulf Arab index. "Expectations are for emerging and developed markets to move higher, which could spark some bottom fishing in lagging markets and the UAE is the most lagging market in the region," said Marwan Shurrab, vice-president and chief trader at Gulfmena Alternative Investments. Yet investors fear other companies will follow Aldar's lead.
"UAE valuations are extremely attractive, but the risk of dilution is making investors cautious," Shurrab added. Property and banking stocks dominate UAE bourses and house prices appear set for further declines. Egypt's index rose 0.8 percent, trimming its weekly losses to 6.4 percent. Fears that political turmoil in Tunisia might spread to other Arab countries had spurred investors to sell.
Kuwait's index slumped to a four-week low. Last year, the government indicated it would part-finance a $104 billion spending programme through local lenders, helping the bank index rise 42 percent in 2010, but few details of the plan have been forthcoming, spurring investors to lock in some of these gains. Qatar Islamic Bank rose 1.8 percent after it reported a 23 percent rise in fourth-quarter profit, beating estimates.