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Business: Macau casino stocks on the rise

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A rise in shares of the major gaming firms operating in the Chinese district of Macau gave investors confidence in the continuing expansion of casino gaming in the area.

Shares of Wynn Macau, the Asian arm of Las Vegas-based Wynn Resorts, rose more than three percent on the Hang Seng index in Hong Kong. The Macau division of Las Vegas Sands, Sands China, jumped more than five percent, as did the local firm SJM Holdings.

In a sharp contrast to the decline in casino revenues felt in Las Vegas and other gambling centers during the recent recession, Macau casinos reported revenue growth in January of more than sixty percent from last year's figures. The estimated revenue for the first month of the new year broke the record set last October by more than US$200 million.

Stock market analysts have noted that shares in Macau-based gaming corporations have surpassed those of many of the Las Vegas-based casino conglomerates. These analysts have noted how casino revenues in the area have been on the rise since last summer. They are also expecting a large revenue infusion into the Macau casinos during the Lunar New Year celebrations this month.

Gambling is illegal in most of Communist China and the anti-casino laws are harshly enforced. The government there has set aside Macau as a special district for legal casino gambling, but maintains strict controls on entry into the area. One factor that may affect the volatility of the stock is the level of accessibility the Chinese government allows for both residents and tourists to visit the Macau casinos.

The availability of casino games to the massive Chinese market is a cause for concern. Many of the casinos depend on low-limit play by high numbers of visitors for their revenues, rather than a limited number of "high rollers". If the government denies the casinos access to low-level players, revenues for some of the major Macau casinos could drop by thirty to forty percent, causing stock prices to tumble down.

04-Feb-2010, 20:34

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