The share price of casino operator Genting Malaysia Bhd suffered its biggest fall in a single trading day on Monday following an announcement by the Malaysian government that it would increase the annual fees and duties on gross revenue.
The Bloomberg news agency says that during the day’s trading session at the Bursa Malaysia, Genting Malaysia shares were down by up to 30 percent compared to the closing price on the previous trading day. That represents the biggest fall since shares in the company were listed in 1989.
The report says shares in the parent company of Genting Malaysia, Genting Bhd, were 12 percent lower at one point on Monday. Genting Malaysia shares closed yesterday 20.48 percent lower at MYR3.61 (US$0,865). Bursa Malaysia is closed today (Tuesday).
Malaysian Finance Minister Lim Guan Eng announced in his budget speech on Friday that the annual fees for casino licences will be increased to MYR150 million (US$36 million) from MYR120 million, and that duties on gaming gross revenue would rise to 35 percent from 25 percent.
Stockbrokers warned that the increases would weigh on the price of Genting Malaysia shares. A note from Japanse brokerage Nomura said that while a gaming tax increase had been acknowledged as a threat to the share price, the market had factored-in a tax rise of only 5 percentage points.
Markets had previously responded to speculation about an increase in the government’s gaming tax, selling down Genting Malaysia stock by about 9 percent since the beginning of October.
Nomura, just like other brokerages, has cut its rating for Genting Malaysia shares from “buy” and reduced its price target to MYR4.20 a share from MYR6.50.
Genting Malaysia runs the Resorts World Genting in Malaysia, and operates casinos in the United States, the Bahamas and Britain.
Genting Malaysia reported second-quarter results in late August, with profit up by 104 percent year-on-year for the quarter, despite Nomura reporting a 21-percent year-on-year decline in VIP gambling volume in the same period.
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