Hong Kong stocks hit 10-month low as regulatory risks infect Macau casino firms while China Evergrande’s lenders suffer
- Stocks have surrendered almost all of the rally in the past four weeks amid a sell-off in casino firms and on Evergrande’s debt woes
- Business outlook of casino operators affected and fair-value uncertainty has risen to very high, Morningstar said
The Hang Seng Index slid 1.5 per cent to 24,667.85 at the close on Thursday, the lowest since November 2. The benchmark has lost 9.4 per cent this year, the worst performer among the major equity gauges globally. The Hang Seng Tech Index retreated 1 per cent while China’s Shanghai Composite Index lost 1.3 per cent.
Sands China led a sell-off that erased more than US$19 billion in market value from Macau casino stocks over two days. China Evergrande Group and some of its principal lenders tumbled after the developer asked to defer loan repayments, according to a media report.
The Macau plan “could reduce the visibility on casino operators’ long-term business outlook, and we raise our fair value uncertainty rating for the Macau gaming companies to very high from high,” Jennifer Song, an analyst at Morningstar, wrote in a report. “The policy steer is fairly vague, in our view, but the reference to social responsibility is sending chills down the spines of investors, given recent developments in the technology and education sectors in China.”
Macau’s surprise proposal, including stricter daily supervision and controls on capital outflows, reignited concerns about the regulatory crackdown that wiped out more than US$1 trillion in market cap from Chinese tech and education stocks overseas.