Gaming | Casino shares drop after cash disclosure rules report

Macau’s casino shares dropped in Hong Kong trading after last week’s Executive Council disclosure that the city may require inbound travelers to disclose cash holdings of more than 120,000 patacas (USD15,000) at entry.

Sands China Ltd. fell 4 percent to HKD36.50, the biggest decline in 11 weeks. Galaxy Entertainment Group Ltd. dropped 4.7 percent and Wynn Macau Ltd. slipped 4.5 percent, while the benchmark Hang Seng Index fell 1.4 percent.

“The report is throwing cold water on reviving sentiment for the casino industry,” said Ronald Wan, chief executive at Partners Capital International in Hong Kong. “After a big rally of late, gaming stocks were in overbought territory anyways.”

The $30 billion gaming industry in Macau has rebounded as operators including Wynn Macau opened new, billion-dollar resorts. Gross gaming revenue rose for the fourth straight month in November, recording the strongest year-on-year growth since February 2014.

Analysts were split on whether news of the cash disclosure, reported after Thursday’s market close, would have a long-term effect on gaming companies.

“Negative knee-jerk reaction on this headline would provide an even better buying opportunity for investors,” DS Kim, an analyst at JPMorgan Chase & Co. in Hong Kong, wrote in a note. The move “does not have anything to do with China’s capital control, nor does it target the gaming industry.”

Michael Ting, a Hong Kong-
based analyst at CIMB Group Holdings Ltd., said the step would be part of a clear trend of China clamping down on capital controls.

“The risk is that this could be just the beginning and there could be more measures going forward,” he said. MDT/Bloomberg