Wynn, Las Vegas Sands Tumble on China’s Casino Crackdown

© Reuters. Wynn, Las Vegas Sands Tumble on China’s Casino Crackdown

(Bloomberg) -- U.S. casino firms with exposure to Macau tumbled on Wednesday, extending a slump that started in the prior session after officials in the Asian gaming hub said they would tighten restrictions on operators.

Wynn Resorts (NASDAQ:WYNN) Ltd. fell as much as 10.5% after an 11% decline on Tuesday. That is the biggest two-day drop for the stock since March 2020. Las Vegas Sands (NYSE:LVS) Corp. dropped as much as 6.2%. Melco Resorts & Entertainment (NASDAQ:MLCO) Ltd. slumped 11%, while MGM Resorts (NYSE:MGM) International fell as much as 3.9%. 

Wednesday’s selloff started in Asia, where Macau’s top gaming stocks listed in Hong Kong lost a record $18.4 billion in combined market. Officials said changes to casino regulations would include appointing government representatives to “supervise” companies in the world’s biggest gaming hub.

“It’s another concerning action of increasing regulation aimed at some of the higher growth parts of the economy,” said Greg Taylor, chief investment officer at Purpose Investments. “It will probably make investors even more hesitant to expand investments in China.”

A Bloomberg Intelligence index tracking big Asia peers fell 23% earlier.  Officials in the enclave -- the only place in China where gambling is legal -- announced that they would begin a 45-day public consultation period to discuss legal revisions.

“Another round of regulatory scrutiny in China is punishing the gambling capital of the world, with the repercussions being felt globally,” said “Another round of regulatory scrutiny in China is punishing the gambling capital of the world, with the repercussions being felt globally,” said Edward Moya, senior market analyst at Oanda Corp. “Foreign investors are growing frustrated with all the Chinese crackdowns and uncertainty as to how much further officials will go.”

Selloff spreads

The latest clampdown is also hurting American depository receipts of Chinese firms. The Nasdaq Golden Dragon China Index fell for a sixth day, dropping as much as 2.1% on Wednesday.

Shares of e-commerce companies also slid after China reported weaker-than-expected retail sales figures for August. Tencent Holdings (OTC:TCEHY) Ltd., Alibaba (NYSE:BABA) Group Holdings Ltd. and JD (NASDAQ:JD).com Inc. all fell by more than 2.6% each, extending losses to a third straight session. 

Meanwhile, ADRs for Yum China Holdings (NYSE:YUMC), Inc. dropped as much as 6% after the restaurant operator warned that its third-quarter profits could fall by up to 60% as a result of the latest Covid-19 outbreak in China.

(Updates share price moves and adds more details throughout.)

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