The government kicked off a public consultation on Wednesday, which made stock prices go down by $14 billion. Investors are afraid that the government will make tighter regulations for gambling. Macau is having a casino license auction next year. The government proposed to change the gaming law. This makes people in Hong Kong not want to buy property because they are worried about it. Many things have been happening with this change that have caused many problems with the housing situation in Hong Kong. Wynn Macau led the market plunge, falling 34% to a record low. The other stocks fell too. It was because of the Chinese government’s decision limiting how much money people could take out of China.
At a press briefing, Lei talked about nine topics. These were the number of licenses to be given, regulations and how they will affect employees. Lei also talked about government representatives to help in day-to-day operations at casinos. Some investors are worried that businesses might not do as well in Macau because of U.S. and China’s rocky relationship. Some people worry that it will be harder for American business owners to get a Macau casino licence there than local business owners.
In June this year, Macau doubled the number of inspectors to make sure that people are not cheating. They also restructured some departments so they could have more supervision. George Choi, an analyst at Citigroup in Hong Kong, said that the public consultation document had limited information. But he liked some of the revisions, and they will help casinos to grow. This will have a positive effect on casino operators.
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The economy in Macau went down after the government started a consultation with the gambling industry. They said there were still some problems. Beijing is worried about Macau’s reliance on gambling. Beijing has not said how it will judge the license rebidding process yet. Some Hong Kong stock analysts downgraded their opinion of the near-term prospects for Macau casino operators in China. They will need to re-bid for permits by June 2022.
An analyst at the bank, J.P. Morgan, said that they were changing their opinion of all gaming companies in Macau from overweight to neutral or underweight because of increased scrutiny on capital management and how they do business before getting new licenses for their operations. A ‘directional’ signal means that it is pointing in one direction. Investors are already having doubts because of this announcement.
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The government has not singled out any U.S. players, but some companies are trying to make their company look like they are based in Macau or China instead of being from another country. Operators had to keep their licenses and made more things. They wanted Beijing to be happy and not worry about them.
Recently, the government in Macau has started to watch casinos more closely. They are looking for people who are doing bad things, like taking money from China and giving it to someone else. They want to stop these things because they think people shouldn’t do them. Beijing is also fighting against people sending money to gamble in countries like Macau. This has made it hard for the junket operators and Macau casino customers that are living in Beijing.
The man said, “But we will not be surprised if the market only sees the bad things in this because people do not like investing.” Macau has not had any visitors because of the coronavirus. Gambling revenues are not as good as they were last year.