Malaysian tycoon Lim Kok Thay’s bid for casino licence has traders on edge as Macau’s old guard face fight to stay alive
- The entry of the Genting chairman into the fray raises the prospect of one of Macau’s established licence holders being run out of town
- Macau stocks have tumbled after what Morgan Stanley described as the ‘negative surprise’ of Kok’s bid
The last-minute bid by Malaysian billionaire Lim Kok Thay for a Macau gaming licence has rattled stock investors.
“This is a negative surprise,” said Morgan Stanley in a report.
Genting, which develops and operates casinos and resorts in countries such as Australia and Singapore, could not be reached for comment on Thursday.
“Who will be out? I put Wynn at the highest risk of all the existing operators,” said Ben Lee, a consultant at iGamiX Management and Consulting.
Wynn is the operator with the least focus on non-gaming, and the only concessionaire without a local partner, figure or principal, said Lee.
The result is expected to be announced in December as Macau’s government hopes to start the new concession term on January 1, 2023.
Sands China, a subsidiary of Las Vegas Sands Corp, closed down 2 per cent at HK$17.34, while MGM China, a unit of US gambling giant MGM Resorts International, fell 1.4 per cent to HK$4.2.
Last month, MGM China said its subsidiary, MGM Grand Paradise, would tender for a new gaming concession. If successful, Pansy Ho Chiu-king, the daughter of the late casino magnate Stanley Ho Hung-sun, will serve as managing director, it said.
SJM, chaired by Daisy Ho Chiu-Fung, fell 1.79 per cent to HK$2.75, while Nasdaq-listed Melco, chaired by Lawrence Ho Yau-lung, rose 1 per cent to US$5.55. Both Daisy and Lawrence are Pansy Ho’s siblings.
Galaxy Entertainment, controlled by Hong Kong tycoon Lui Chee woo, fell 0.58 per cent to HK$43.
The surprise bid by GMM adds uncertainty and could give the government more bargaining power in negotiations with the casino operators in the next two months, Morgan Stanley analyst Gareth Leung said in a report released late on Wednesday.
Both Citibank and JP Morgan said in their reports that it is unlikely a government would choose a new foreign operator over incumbents who have invested billions of dollars and employed local staff over two decades.
The Macau government collected about 13.96 billion patacas (US$1.73 billion) in fiscal revenue from direct taxes on gaming in the first seven months of this year, down 37.1 per cent year on year, as the Covid-19 pandemic hit the city’s businesses.
Analysts said Macau stocks need a border reopening to be announced if they are to get the boost they need.