Macau casino stocks tumble again

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Macau operator stocks took another tumble yesterday, with Wynn Macau and MGM China both down almost nine per cent amid concerns over increasing regulatory risk and the emergence of the Omicron variant in China.

Sands China dropped 6.9 per cent, while Galaxy Entertainment was off 4.2 per cent. SJM Holdings also shed 4.2 per cent, while Melco Resorts and Entertainment was little changed in US trading, though Hong Kong-listed Melco International Development was down 7.9 per cent.

The declines come after Fitch Ratings warned of imminent increased regulatory risk for three of the operators. It put Sands China and SJM Holdings on Ratings Watch Negative, while reaffirming MGM China would also stay on the negative watch list.

“Near-term credit risk has increased with limited visibility into the rebidding procedures, how the future regulatory and operating environment will impact cash flows and leverage and the likelihood and consequences of incumbent operators’ ability to secure a new gaming concession,” it said.

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Fitch said it believes the likelihood of the current concessionaires failing to obtain a new licence is low, but should not be ignored.

The regulatory concern added to fears over the potential spread of Omicron in China, which has a zero-tolerance policy when it comes to Covid.

On Tuesday, a case was reported in the southern city of Guangzhou in a returning passenger, taking the tally to two. Guangzhou is the capital of Guangdong province, which is the largest source market for Macau.

Source: Asia Gaming Brief

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