Macau casinos slide on concern China gamblers may spend less

Macau magnate Stanley Ho’s SJM Holdings, Asia’s biggest casino company by sales, fell 5.2 % to us$ 2.29.

Gambling in Macau “is a luxury expenditure by mainland Chinese,” Lewis Wan, chief investment officer at Pride Investments Group in Hong Kong, said in a phone interview. “When the stock market isn’t performing well, it will definitely affect their amount they’re willing to gamble.”

The MSCI Asia Pacific Index fell 1.9 %, extending a six-day decline, after earlier retreating as much 5.5 %. Hong Kong’s benchmark Hang Seng index fell 5.7 %. Casino gambling revenue in Macau, which was four times that of the Las Vegas Strip’s last year, grew 48 % to us$ 3 billion in July.

Sands China, the Macau unit of billionaire Sheldon Adelson’s Las Vegas-based casino company, declined 5 % while Wynn Macau slid 6.3 %, after earlier plunging a record 11 %. MGM China Holdings, majority owned by MGM Resorts International (MGM), dropped 4.1 % to us$ 1.91. Galaxy Entertainment Group fell 4.9 % to us$ 2.38.

“We really need to wait for August and September gaming revenue numbers to know whether the negative sentiment has affected Chinese counters as well,” said Teng Yee Tan, an equity analyst at CIMB-GK Securities, over the phone from Hong Kong. “If you look at the year-to-date gain from gaming stocks, before the crash, I think it’s not totally unexpected if investors decide to take profit out of this sector.”

MGM Resorts, the biggest casino operator on the Las Vegas Strip, reported second-quarter earnings that beat analyst estimates as a recovery strengthened in Nevada and it took control of its Macau joint venture with Stanley Ho’s daughter, Pansy Ho.

Net income for MGM Resorts was us$ 3.44 billion, boosted by a us$ 3.5 billion gain from consolidating Macau on its books. That compares to a loss of us$ 883.5 million, or us$ 2 a share, a year earlier when earnings were hit by CityCenter development writedowns, the Las Vegas-based company said in a statement yesterday.