Macau casino operators up $65 bn value

HONG KONG Shares of Macau's top casino operators racked up as much as $65.53 billion $8.42 billion on Monday - or 15 per cent of the market value - as the government of the world's largest gambling hub kept its limit on casino licences to six.

The six Macau casino operators had gained 9.9 per cent in value, or HK $42.2 billion, putting the overall market value of the oprators at around HK $469 billion at the close of the Hong Kong market. The shares of Sands China Ltd, which jumped by as much as 22.3 per cent, went up 14.6 per cent on the day's biggest daily gain since October 2011 at the end of the day. That was less than a 0.7 per cent decline in the Hang Seng Index.

Wynn Macau, which had gone up as much as 19.1 per cent, closed up 11.9 per cent in its best day since March 2020.

The number of new casino operators allowed to function in the world's largest gambling hub will be limited to six with an operating period of up to 10 years, according to Macau's government on Friday.

Citi said that the regulatory announcement should remove some of the concerns of investors such as dividends, government oversight, minimum shareholding by a Macau permanent resident, and gaming tax.

The former Portuguese colony is the world's biggest gambling hub in terms of money wagered.

Macau tightened scrutiny of casinos in recent years, with authorities clamping down on illegal capital flows from mainland China and targeting underground lending and illegal cash transfers.

In Hong Kong, the market value of U.S. casino operators, including Sands China, Wynn Macau, MGM China, and Melco, increased by as much as $43.23 billion and $5.55 billion.

Citi raised target prices on six Macau casino operators by 8 per cent -- 14 per cent after the government clarified the revisions in gaming law.

The shares of Melco, MGM China, SJM and Galaxy Entertainment went up between 4.8 per cent and 11.7 per cent.

Jefferies wrote in a research note that the proposed bill would remove the current sub-concession structure, but it wouldn't change to the competitive dynamics.

As the government cracks down on junkets continues, we expect long-term pressure on VIP business, Jefferies said. Jefferies said that the near-term gross gaming revenue outlook remains bleak due to uncertainties over timing of border reopening with recent COVID 19 outbreaks in Mainland and Hong Kong.