GGRAsia – Macau casino op HK stocks tumble after Alvin Chau arrest

Macau casino op HK stocks tumble after Alvin Chau arrest

Nov 29, 2021 Newsdesk Latest News, Macau, Top of the deck

Stocks of Macau casino operators fell substantially in the Hong Kong market on Monday, after news that Alvin Chau Cheok Wa – boss of the Suncity Group junket brand – had been detained on Saturday over a probe into alleged promotion of illicit gambling.

At the close of trading, the aggregate market capitalisation of the Hong Kong-listed entities linked to Macau’s six concessionaires had fallen by HKD28.24 billion (US$3.62 billion), according to an estimate by GGRAsia.

MGM China Holdings Ltd led the slump, sliding 10.1 percent to HKD5.23 by the close.

Wynn Macau Ltd fell around 7.8 percent; SJM Holdings Ltd declined almost 6.7 percent; Galaxy Entertainment Group Ltd slipped 5.4 percent; and Sands China Ltd dropped by close to 5.3 percent.

Melco International Development Ltd, the parent of U.S.-listed Melco Resorts and Entertainment Ltd, fell by 7.5 percent at the close of trading on Monday.

Two Hong Kong-listed companies linked to Mr Chau, and with casino business interests, had declared a trading halt at 9am. The companies – Suncity Group Holdings Ltd and Summit Ascent Holdings Ltd – said in separate filings that trading in their respective shares had been halted “pending the release of an announcement in relation to news coverage” regarding Mr. Chau. By the time this story went online, the announcement had still to be issued.

It was reported on Monday that Mr Chau had been placed in pre-trial detention in Macau, following a decision by a local judge. He has been questioned on local allegations of being a member of a criminal group, of illegal gambling, and of money laundering.

Despite the decreased role of VIP gaming in the casino industry in Macau, the news of Mr Chau’s case “could still weigh on sentiment,” brokerage JP Morgan Securities (Asia Pacific) Ltd had said in a note published on Saturday. “While the news is only directly related to junket/VIP, some investors may interpret this as a signal of a potentially broader clampdown on gambling itself, a view that we don’t agree with but cannot disprove.”

Mr Chau “is arguably the biggest (and certainly most famous) figure in the junket industry, as the founder/chief executive of the undisputed biggest junket in the world, Suncity Group, which accounted for 40 percent to 45 percent of the junket market” in Macau based on 2019 figures, JP Morgan added in its Saturday note.

Macau’s junket sector has been shrinking in terms of number of operators for eight consecutive years. Travel restrictions associated with the Covid-19 pandemic, and China’s criminalisation of the organising of “overseas gambling” have added to headwinds that trouble the city’s junket sector, industry analysts have suggested.

VIP baccarat, which in 2019 represented nearly half of all Macau casino gross gaming revenue, accounted for only 31.8 percent of the city’s casino GGR in the three months to September 30, at MOP5.96 billion (US$744.1 million), according to official data.