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Thursday, 15 October 2009
Macau casino review may improve outlook
Macau’s move to review gaming rules in the world’s fastest-growing gambling market could brighten the outlook for casino stocks as potential curbs would help profits by limiting oversupply, analysts said yesterday.
Potential curbs would limit oversupply in gambling market and help profits
Reuters 14 October 2009
(HONG KONG) Macau’s move to review gaming rules in the world’s fastest-growing gambling market could brighten the outlook for casino stocks as potential curbs would help profits by limiting oversupply, analysts said yesterday.
Shares of Macau casino operators recovered most of their losses after falling as the Macau government (www.gov.mo) said that it was considering rules that might limit the number of tables and raise the age limit for casino customers from 18 to 21.
Analysts and brokers however, said that investors’ fears were overdone and did not reflect the outlook of Macau’s six casino operators, among them Las Vegas Sands, Wynn Resorts, Galaxy, SJM Holdings Ltd, Melco Crown Entertainment Ltd and a casino run by MGM Mirage and local businesswoman Pansy Ho.
‘It’s more psychological,’ said Francis Lun, a general manager at Fulbright Securities, referring to the stock falls yesterday. ‘The problem of Macau now is oversupply, so if the government restricts the supply, it is good for the existing players.’
Macau, once a Portuguese colony and now a special administrative region under Chinese rule, has repeatedly sought to rein in the explosive growth in the only market in China where gambling is legal.
Shares of Wynn Macau, the Asia unit of US casino giant Wynn Resorts, lost 1.1 per cent before turning positive, and SJM Holdings, Macau gaming tycoon Stanley Ho’s flagship firm, was down 3.5 per cent. Galaxy Entertainment Group and Melco International were down 1.4 per cent and 3.8 per cent, respectively. Some of the stocks later pared those losses, with Wynn Macau even rising slightly above Monday’s close.
The new rules appear to be aimed at cleaning up an industry that has seen explosive growth in the last three years.
Earlier government strictures, dating from April 2008, included a moratorium on new casino licences and a building freeze, moves seen as motivated by an increasingly concerned Beijing.
Macau generated HK$105.6 billion (S$19.03 billion) of gross gaming revenue in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period.
Shares of Macau casino operators have soared in the past month after gambling revenues in the enclave rose to a new high in August, signalling a faster-than-expected recovery in Macau.
Galaxy rose 17 per cent, SJM gained 16 per cent and Melco Crown rose 6 per cent, beating a rise of 2.5 per cent in Hong Kong’s benchmark Hang Seng Index.
Rules now being considered include raising to 21 from 18 the age of entry into casinos and moving slot machine halls to commercial zones, away from residential areas.
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Macau casino review may improve outlook
Potential curbs would limit oversupply in gambling market and help profits
Reuters
14 October 2009
(HONG KONG) Macau’s move to review gaming rules in the world’s fastest-growing gambling market could brighten the outlook for casino stocks as potential curbs would help profits by limiting oversupply, analysts said yesterday.
Shares of Macau casino operators recovered most of their losses after falling as the Macau government (www.gov.mo) said that it was considering rules that might limit the number of tables and raise the age limit for casino customers from 18 to 21.
Analysts and brokers however, said that investors’ fears were overdone and did not reflect the outlook of Macau’s six casino operators, among them Las Vegas Sands, Wynn Resorts, Galaxy, SJM Holdings Ltd, Melco Crown Entertainment Ltd and a casino run by MGM Mirage and local businesswoman Pansy Ho.
‘It’s more psychological,’ said Francis Lun, a general manager at Fulbright Securities, referring to the stock falls yesterday. ‘The problem of Macau now is oversupply, so if the government restricts the supply, it is good for the existing players.’
Macau, once a Portuguese colony and now a special administrative region under Chinese rule, has repeatedly sought to rein in the explosive growth in the only market in China where gambling is legal.
Shares of Wynn Macau, the Asia unit of US casino giant Wynn Resorts, lost 1.1 per cent before turning positive, and SJM Holdings, Macau gaming tycoon Stanley Ho’s flagship firm, was down 3.5 per cent. Galaxy Entertainment Group and Melco International were down 1.4 per cent and 3.8 per cent, respectively. Some of the stocks later pared those losses, with Wynn Macau even rising slightly above Monday’s close.
The new rules appear to be aimed at cleaning up an industry that has seen explosive growth in the last three years.
Earlier government strictures, dating from April 2008, included a moratorium on new casino licences and a building freeze, moves seen as motivated by an increasingly concerned Beijing.
Macau generated HK$105.6 billion (S$19.03 billion) of gross gaming revenue in 2008, more than double the HK$46.7 billion generated by the Las Vegas Strip during the same period.
Shares of Macau casino operators have soared in the past month after gambling revenues in the enclave rose to a new high in August, signalling a faster-than-expected recovery in Macau.
Galaxy rose 17 per cent, SJM gained 16 per cent and Melco Crown rose 6 per cent, beating a rise of 2.5 per cent in Hong Kong’s benchmark Hang Seng Index.
Rules now being considered include raising to 21 from 18 the age of entry into casinos and moving slot machine halls to commercial zones, away from residential areas.
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