Wednesday, September 29, 2021

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    Macau casino stocks shed $16bn as government seeks greater oversight

    The latest information on the gambling industry

    The Macau government’s willingness to increase casino surveillance is on the market for listed gambling companies, as analysts warned that strict regulations could put pressure on margins already tense due to the Covid-19 pandemic. Wipe out $ 16.4 billion from value.

    Sands China’s share price fell 29%, Wynn Macau fell 28%, and rival MGM China fell nearly 22% on Wednesday in Hong Kong trading. Galaxy Entertainment and SJM Holdings each decreased by about 18%, while Melco International decreased by 16.8%.

    Prices have fallen as Chinese territory has launched a 45-day public consultation on game law amendments. This is expected to enhance surveillance of the world’s largest gambling hub operators. The 20-year concession of the Macau-operated casino group will expire next year.

    As Beijing embarks on casino control, authorities are moving to tighten casino control. Wide range of campaigns Reshaping a country’s business, political and cultural landscape to eradicate inequality and promote “cultural prosperity”.

    Chinese regulators impose strict requirements on the country’s largest companies in the technology, online education and video game sectors, Social behavior Recognized as harmful.

    Desmond Lam, an associate professor of game management at the University of Macau, said:

    The bill indicated that the government was planning to add its own representative to the board of casinos making concessions in Macau. China’s only jurisdiction If gambling is legal.

    The law is also expected to cover the number and duration of concessions for casino operators, with authorities as the largest employer on Chinese territory. Main driver Of economic growth.

    Casino operators too Significantly weakened The pandemic has curbed the vibrant flow of tourists to cities in mainland China.

    Total gambling revenues have fallen by about 80 percent from pre-pandemic levels, according to figures released by Macau’s Gambling Inspection and Coordination Bureau.

    The proposed law is also expected to consider “junkets,” a sub-sector of the gambling industry that seduces high rollers from the mainland and gives them credit in Macau.

    This is likely to squeeze the profits of the VIP, but since the beginning of the anti-ported drive almost 10 years ago that signed the Xi Jinping President, we are slowly decreased as a percentage of casino revenue.

    However, Alidad Tash, a former casino executive at game consultancy 2nt8 Limited, said that junket restraint was China’s capital regulation, Prevents citizens from bringing large sums of money into Macau.

    “The profitable premium mass segment relies on junkets to lend capital to people coming from mainland China,” he said, predicting that Win and SJM would be most affected by VIP package restrictions. Did.

    JP Morgan downgraded all six Macau casino operators to underweight or neutral on Wednesday.

    “I think this announcement has already planted a seed of suspicion in the minds of investors, which will downgrade these names until the key points are clear,” said DS Kim, an analyst at JP Morgan. Will be enough. “

    However, some observers remained optimistic about the potential changes.Citi’s George Choi acknowledged that the market may be vaguely looking at the latest announcements, but “all proposed revisions [of the law] It is there to promote long-term sustainable growth. “

    Macau casino stocks shed $16bn as government seeks greater oversight Source link Macau casino stocks shed $16bn as government seeks greater oversight

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