Stocks of Macau casino operators fell substantially in the Hong Kong market on Wednesday after the Macau government announced the day before its proposed changes to the city’s gaming law framework. The government is suggesting an end to the system of sub-concessions, and proposes to step up scrutiny of casino concessionaires, including “direct supervising” these companies.
At the close of trading on Wednesday, the aggregate market capitalisation of the Hong Kong listed entities linked to Macau’s six concessionaires had fallen by a combined 26 percent, or more than US$18 billion.
Sands China Ltd led a slump among gambling companies listed in the Hong Kong Stock Exchange on Wednesday, sliding 32.5 percent to HKD16.84 (US$2.20) at the end of trading.
Wynn Macau Ltd fell nearly 29.0 percent; SJM Holdings Ltd declined 24.0 percent; Galaxy Entertainment Group Ltd slipped 20.0 percent; and MGM China dropped 26.8 percent.
Melco International Development Ltd, the parent of U.S.-listed Melco Resorts and Entertainment Ltd, fell by 20.1 percent at the close of trading on Wednesday.
In a Tuesday press conference, the government also suggested a need for it to approve dividend distribution to shareholders by the city’s casino operators. There are also plans for government-appointed “delegates” to oversee how gaming operators fulfil their concession duties.
The moves are mentioned in a document outlining a public consultation on the future of the industry, including the revision of the city’s gaming law. The document was put for a 45-day public consultation starting on Wednesday.
Officials also suggested raising the shareholdings of local directors in casino concessionaries from the currently required minimum of 10 percent, according to the public consultation paper.
In Tuesday’s media briefing on the consultation process, Macau’s Secretary for Economy and Finance, Lei Wai Nong, said that the government would like the Macau public to give their views on the maximum number of gaming concessions that should be allowed in the city, though he noted the public should be realistic in thinking about an upper cap on numbers.
In the consultation text, the government also proposes revising the length of future gaming concessions, although no time period was specified. The government also mentioned that any future provision for temporary extension of gaming concession terms, should be “in proportion” to whatever was the length of the new concession period.
The government has said Macau’s gaming law needs to be updated as a linked issue to a fresh public tender process for Macau gaming rights.
The city’s existing six gaming concessions are due to expire in June 2022, unless the authorities grant a form of limited extension as permitted under current Macau gaming law. Such extension can be in increments, up to a maximum of five years from the original 20-year term.
At Tuesday’s media briefing, Mr Lei declined to comment on whether the Macau government would seek to extend the current permits. He also declined to comment on the timetable for completing revision of the city’s gaming law.
Brokerage JP Morgan Securities (Asia Pacific) Ltd on Tuesday downgraded the weightings of the six Macau casino operators, to either ‘underweight’ or ‘neutral’. That was due to a “policy signal” from the Macau authorities, “indicating heightened scrutiny on capital management and daily operation.”
Jun 29, 2022Only two of Macau’s 18 satellite casinos – the Rio Casino and the President Casino – have closed amid changes to the city’s regulatory system for such properties, and against...
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"There is still no clarity about when border easing for Macau will occur. In the end these changes are needed to see a rebound for Macau business"
Vitaly Umansky, Louis Li and Shirley Yang
Analysts at brokerage Sanford C. Bernstein