Macau casinos plunge on weak gambling over Lunar New Year

[SINGAPORE] Macau casino shares plunged in Hong Kong trading on weak gambling over the Lunar New Year holiday period and expectations revenue from Chinese high-rollers will continue to slump in coming months.

Wells Fargo & Co. said its checks suggested weak revenue trends in both VIP and mass segments, with a number of mass tables empty on the third and fourth days of Lunar New Year, analyst Cameron McKnight wrote in a note late yesterday. He cut his forecast for Macau gross gaming revenue in February to a fall of 49-51 per cent, from a 35-45 per cent drop previously.

China's Lunar New Year, which started on Feb 19, is traditionally a period for Chinese to travel and peak gambling season in the former Portuguese colony. Macau's casinos have been hit by a Chinese government crackdown on corruption and stricter travel rules that deterred high rollers from entering the territory.

"We believe the situation is likely to deteriorate in the coming months," Credit Suisse analyst Kenneth Fong wrote in a note today.

"On the VIP side, with more junkets shutting down business post Chinese New Year and working capital in the system shrinking, revenue may see another leg down."

MGM China Holdings Ltd fell as much as 8.3 per cent in Hong Kong trading, the biggest intraday decline since May 8 2014.

Galaxy Entertainment Group Ltd and Sands China Ltd fell more than 7.5 per cent, the worse performers on the benchmark Hang Seng index, which was little changed as of 10.30am

Wynn Macau Ltd tumbled as much as 8.4, Melco Crown Entertainment lost 7.2 per cent, and SJM Holdings Ltd dropped 7.5 per cent.

The shares extended their declines from yesterday after a senior Macau official said the city wants to study restrictions on mainland Chinese tourists to ease overcrowding.

China's public holiday for the Lunar Festival was Feb 18 to Feb 24.

BLOOMBERG