Japanese construction stocks fell, led by Obayashi Corp., after Daiwa Securities Group Inc. said builders may not receive some revenue from Dubai as the nation's state-owned company asked to postpone debt payments.
Stocks around the world dropped as Dubai World, the government investment company with $59 billion of liabilities, said it will ask creditors for a "standstill" agreement. Japanese builders may lose "tens of billions of yen" if Dubai's investment fund succeeds in delaying payments, Daiwa Securities SMBC Co. said in a report Friday.
The request for a postponement includes bonds from property unit Nakheel PJSC. The sheikdom borrowed $80 billion during a four-year construction boom that transformed Dubai into a regional tourism and financial hub.
Obayashi, which said it had no exposure to Dubai World, dropped 8.7 percent to the lowest level since April 2003. Kajima plummeted 14 percent to ¥162. A Kajima representative was not immediately available to comment.
"There is worry that this debt problem could undermine all projects with government involvement," Daiwa said in the report. "Even the government's release referred to this debt extension as a first step, implying that it could ask for additional extensions."
Akira Asawaka, a spokesman for Shimizu Corp., said the Japanese company hasn't received a request for suspension of payments from Nakheel. Shimizu dropped 4 percent on the Tokyo Stock Exchange, while Taisei Corp. lost 7.1 percent.