Shares of Macau casino operators on Wednesday shed as much as a third of their value, losing about $18 billion, as the government kicked off a regulatory overhaul that could see its officials supervising companies in the world’s largest gambling hub.
With Macau’s lucrative casino licenses up for rebidding next year, the plan spooked a Hong Kong market already deep in the red after Beijing’s regulatory crackdown on sectors from technology to education and property that sliced hundreds of billions of dollars off asset values.
Wynn Macau (1128. HK) led the plunge, falling as much as 34% to a record low, followed by a 28% tumble for Sands China (1928. HK). Peers MGM China (2282. HK), Galaxy Entertainment (0027. HK), SJM (0880. HK) and Melco Entertainment (0200. HK) all fell heavily, taking the drop to HK$143 billion ($18 billion).
U.S. casino companies also fell for the second straight day, losing as much as $4 billion in market capitalization on Wednesday, with Las Vegas Sands Corp (LVS.N) slumping to more than a year low, Wynn Resorts Ltd (WYNN.O) and MGM Resorts International (MGM.N), dropping 8% and 5%, respectively.
Beijing, increasingly wary of Macau’s acute reliance on gambling, has not yet said how the license rebidding process will be judged.
“Margins will be crushed at the gambling capital of the world and that will drag down all the big casinos,” said Edward Moya, senior market analyst at OANDA in New York.
Some Hong Kong stock analysts wasted little time in downgrading their view of near-term prospects for casino operators in the Chinese special administrative region, who must all rebid for licenses when current permits expire in June 2022.
The government also plans to increase voting shares in gaming concessionaires for permanent residents of Macau, as well as more rules on the transfer and distribution of profits to shareholders.
Discussions over the future of Macau’s casino licenses come amid rocky U.S.-China relations, leaving some investors fearing an edge for domestic players over U.S.-based casino operators.
The government has not singled out any U.S. players, but companies have moved to beef up the presence of Chinese or local executives as they position themselves more as Macau operators than foreign ones.
The consultation comes as Macau has struggled with a dearth of travelers because of coronavirus curbs since the start of 2020. While gambling revenues have picked up in recent months, they remain less than half of 2019 monthly figures.
