Macau casino stocks lose almost US$5 billion in sell-off as China’s gambling crackdown snares junket boss
- Alvin Chau, head of Macau casino junket operator Suncity Group, arrested along with 10 others as authorities investigate a cross-border gambling syndicate
- An index tracking major casino concessionaires tumbled 7.6 per cent, erasing US$4.8 billion of market value or about one-third of the September rout
Macau casino stocks tumbled, erasing US$4.8 billion of market value in Hong Kong, as the arrest of the head of the biggest junket operator in the gambling hub revived concerns about Beijing’s increased scrutiny of the industry.
Sands China and Galaxy Entertainment, the two gaming stocks on the benchmark Hang Seng Index, dropped more than 5 per cent on Monday, extending a sell-off on Friday that was spurred by the emerge of the Omicron virus strain. MGM China sank 10 per cent. The losses were much wider than the index’s 1 per cent decline.
A gauge tracking six casino stocks plunged 7.6 per cent on Monday, the biggest slide since September 15 when the Macau government issued a draft on the overhaul of the gambling industry. Monday’s losses amounted to almost one-third of the September rout in the casino concessionaires.
“Macau’s go-go years do seem over,” said Steve Vickers, a risk management consultant at Steve Vickers & Associates and a former Hong Kong policeman. “Investors in the casino businesses should manage expectations accordingly.”
The casino industry’s rapid expansion always depended on a degree of acquiescence in capital outflows and organised crime involvement with the junkets, Vickers added. China and Macau have now shown “an appetite for tighter control,” he said.