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Billions blown as Macau casino investors fold amid gambling review

By Farah Master and Donny Kwok HONG KONG (Reuters) -Macau casino operator stocks plummeted by as much as a third on Wednesday, losing around $14 billion in value, as the...
Billions blown as Macau casino investors fold amid gambling review © Reuters. FILE PHOTO: People wearing masks walk in front of Casino Lisboa, before its temporary closing, following the coronavirus outbreak in Macau, China February 4, 2020. REUTERS/Tyrone Siu

By Farah Master and Donny Kwok

HONG KONG (Reuters) -Macau casino operator stocks plummeted by as much as a third on Wednesday, losing around $14 billion in value, as the government kicked off a public consultation that investors fear will lead to tighter regulations in the world's largest gambling hub.

With Macau's lucrative casino licences up for rebidding next year, a government proposal to revise the city's gaming law spooked a Hong Kong market already slammed hard into the red by a broad Beijing regulatory crackdown, across sectors from technology to education and property, that has sliced hundreds of billions of dollars off asset values.

Wynn Macau (OTC:WYNMF) led the plunge, falling as much as 34% to a record low, followed by a 28% tumble for Sands China (OTC:SCHYY). Peers MGM China (OTC:MCHVY), Galaxy Entertainment, SJM and Melco Entertainment all fell heavily, bringing the drop to HK$109 billion ($14 billion).

The slump came after Lei Wai Nong, Macau's secretary for economy and finance, late on Tuesday gave notice of a 45-day consultation on the gambling industry starting Wednesday, saying there were still some deficiencies in industry supervision.

Beijing, increasingly wary of Macau's acute reliance on gambling, has not yet indicated how the licence rebidding process will be judged.

Some Hong Kong stock analysts wasted little time in downgrading their view of the near-term prospects for casino operators in the Chinese special administrative region. All are required to rebid for licences when current permits expire in June 2022.

At J.P. Morgan, analyst D.S. Kim said the bank was downgrading all Macau gaming names from overweight to neutral or underweight due to heightened scrutiny on capital management and daily operations ahead of licence renewals.

"We admit it's only a 'directional' signal, while the level of actual regulation/execution still remains a moot point," he said, adding that the announcement would have already planted a seed of doubt in investors' minds.

TIGHTER REGULATION

At a press briefing on Tuesday, Lei detailed nine areas for the consultation, including the number of licenses to be given, increased regulation and protecting employee welfare, as well as introducing government representatives to supervise day-to-day operations at the casinos.

Discussions over the future of Macau's casino licences come amid rocky U.S.-China relations, leaving some investors fearing that U.S.-based casino operators may not fare as well as local players.

The government has not singled out any U.S. players, but there has been a push within the companies to beef up the presence of Chinese or local executives to position themselves more as a Macau operator rather than foreign.

Ahead of the licence expirations, operators have tried to bolster their corporate responsibility and diversify into non-gaming offerings to placate Beijing's fears of over-reliance on gambling.

Macau has massively tightened scrutiny of casinos in recent years, with authorities clamping down on illicit capital flows from mainland China and targeting underground lending and illegal cash transfers.

Beijing has also intensified a war on cross-border flows of funds for gambling, affecting the financing channels of Macau's junket operators and their VIP casino customers.

In June this year, Macau more than doubled the number of gaming inspectors and restructured several departments to ramp up supervision.

George Choi, an analyst at Citigroup (NYSE:C) in Hong Kong, said that while the public consultation document offered limited details, the suggested revisions enhance long-term sustainable growth for the industry with "positive implications on the six casino operators".

He cautioned, however, that "we will not be surprised if the market focuses only on the potentially negative implications, given the weak investor sentiment".

The consultation comes as Macau has struggled with a dearth of travellers because of coronavirus curbs since the start of 2020. While gambling revenues have picked up in recent months, they remain at less than half of 2019 monthly hauls.

($1 = 7.7783 Hong Kong dollars)

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22-09-2021 09:46:14 (UTC+7)

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 EUR/USD1.1724↑ Sell
 GBP/USD1.3658Neutral
 USD/JPY109.43↑ Buy
 AUD/USD0.7245↑ Buy
 USD/CAD1.2798↑ Sell
 EUR/JPY128.29↑ Buy
 EUR/CHF1.0834↑ Sell
 Gold1,777.85Buy
 Silver22.710Buy
 Copper4.2130↑ Buy
 Crude Oil WTI71.06Neutral
 Brent Oil74.82Neutral
 Natural Gas4.829Buy
 US Coffee C183.70↑ Buy
 Euro Stoxx 504,097.51↑ Buy
 S&P 5004,354.18↑ Sell
 DAX15,348.53↑ Buy
 FTSE 1006,980.98↑ Buy
 Hang Seng24,221.54Neutral
 Small Cap 20002,190.36↑ Sell
 IBEX 358,756.00Neutral
 BASF62.280↑ Sell
 Bayer45.70↑ Buy
 Allianz187.45↑ Buy
 Adidas281.90↑ Sell
 Lufthansa8.377↑ Sell
 Siemens AG145.32↑ Sell
 Deutsche Bank AG10.095Buy
Mua/Bán 1 chỉ SJC
# So hôm qua # Chênh TG
SJC Eximbank5,660/ 5,710
(10/ 10) # 816
SJC HCM5,650/ 5,715
(5/ 5) # 821
SJC Hanoi5,650/ 5,717
(5/ 5) # 823
SJC Danang5,650/ 5,717
(5/ 5) # 823
SJC Nhatrang5,650/ 5,717
(5/ 5) # 823
SJC Cantho5,650/ 5,717
(5/ 5) # 823
Cập nhật 22-09-2021 09:46:16
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ↀ Giá vàng thế giới
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RON 95-IV2149021910
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$ Tỷ giá Vietcombank
Ngoại tệMua vàoBán ra
USD22.630,0022.860,00
EUR26.007,0827.360,60
GBP30.295,3831.561,13
JPY203,28215,04
KRW16,6220,24
Cập nhật lúc 09:43:52 22/09/2021
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