Casino shares tumble amid tightened restrictions for Guangdong arrivals
Gaming operators in the city saw their shares plunge up to 13% yesterday following the tightened quarantine requirements for some travelers from the mainland, amid the new surge of Covid-19 cases in China.
Health authorities have announced that travelers who visited Zhongshan and Shenzhen cities, and areas of Guangzhou, Yangjiang and Dongguan will now be required to quarantine for seven to 14 days upon arrival.
Leading the plunge in casino shares was Wynn Macau who recorded a loss of 13% to HKD5.12, followed by SJM Holdings, whose share price fell 12.3% to HKD3.2, and Sands China, recording a plunge of 12% to HKD15.6.
By the time trading closed in the Hong Kong Stock Exchange, Melco International dropped 11% to HKD5.9, while MGM China recorded a 4.9% drop to some HKD4.50, and Galaxy Entertainment Group lost 5% to HKD39.
Vitaly Umansky, managing director and senior analyst of global gambling at AllianceBernstein, said that there has been a significant reduction in travel within China in recent weeks, and that the number of visitors from China could fall further as Beijing advises citizens against traveling, as cited in a Dow Jones report.
If Macau were to suffer a significant Covid-19 outbreak, the worst-case scenario could include border closures, which would weigh on casino operators that have already been hurt by two years of reduced visitation, he added.
On Sunday officials locked down the southern city of Shenzhen, which has 17.5 million people, and is a major tech and finance hub bordering Hong Kong. Everyone in Shenzhen will undergo three rounds of testing after 60 new cases were reported Sunday.
Back in September, casino stocks plunged as much as a total of USD18 billion in market value following reports of possible tightened regulations in the gaming industry, as the local government kicked off the public consultation.
The decrease amounted to a total of over HKD147 billion when combined.
However, following the announcement of amendments to the city’s gaming law in January, casino shares recorded a surge of up to nearly 17%.
Although Macau’s gaming market still remains volatile due to Covid-19 restrictions and the unwinding of the VIP market, analysts believed that the surge of stocks during January is a “positive outcome and meaningfully reduces Macau license risk and license term risk for Macau operators.”
