Macau casino stocks tumble on China crackdown reports

Shares of casino operators in Macau fell sharply in Wednesday trading following a newspaper report that Beijing plans to crackdown on the illicit transfer of funds through the territory’s casinos.

China’s Ministry of Public Security is leading the move, according to Hong Kong’s South China Morning Post, which claims to have seen documents confirming the government’s intentions. The documents were sent to Macau’s banks late yesterday by the city’s monetary authority.

According to the report, the new measures will give the Public Security Ministry’s Economic Crimes Investigation Bureau electronic access to all transfers through state-backed UnionPay’s bank payment card to identify suspicious transactions.

The illegal use of UnionPay terminals has been under the regulatory spotlight since earlier this year, with regulators stepping up scrutiny of transactions amid concern they may have been used to circumvent China’s strict currency controls.

The bureau met with Macau regulators last month to discuss illegal use of the system.

Any further measures that may affect liquidity are likely to have a major impact on Macau’s junket system, which Standard Chartered described as near broken in a commentary recently.

In New York trading, Las Vegas Sands’ shares were down almost 5 percent to the lowest levels in two years. Wynn Resorts fell 3.5 percent to hit a new 52-week low, MGM Resorts was down more than 6 percent, also setting a new 52-week low, while Melco Crown lost 3.5 percent, hitting its lowest levels since early 2013.

The stocks had also been sharply lower in Hong Kong trading. SJM Holdings dropped 6 percent in Hong Kong, while Galaxy Entertainment lost 8.3 percent.

 

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