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Wynn Macau shares drop after US rout on harassment allegations
[HONG KONG] Shares of Steve Wynn's Chinese casino operation fell the most in almost a month after allegations the Wynn Macau Ltd chairman sexually harassed women.
The Macau unit, which accounts for the bulk of Wynn Resorts Ltd's revenue, slumped as much as 6.5 per cent to HK$28.05(S$4.72) at the start of trading in Hong Kong on Monday. On Friday, US parent Wynn Resorts Ltd's shares fell 10 per cent in New York, the most in 13 months.
Morgan Stanley and Union Gaming Group LLC downgraded their ratings on Wynn Macau stock on Monday, after the Wall Street Journal reported that Wynn - a casino industry stalwart - pressured massage therapists and a former resort manicurist to perform sex acts. The allegations were denied by the Wynn Resorts' founder.
Wynn assets are "best in class," but the uncertainty surrounding the harassment allegations and the potential for local regulatory review may push investors away from Wynn Macau and toward rivals Galaxy Entertainment Group Ltd and Sands China Ltd., Union Gaming analyst Grant Govertsen wrote in a note Monday. He downgraded Wynn Macau to a hold from buy. Morgan Stanley lowered its rating to equal-weight from overweight previously.
The long-term impact on the stock may be muted, according to Dickie Wong, Hong Kong-based executive director of research at Kingston Securities Ltd. "The company's overall operation is on a good track," he said. "Wynn's scandal is more personal-related. The impact to the whole industry should be limited." Before today's move, shares of Wynn Macau had climbed to an almost 3 1/2-year high as VIPs return to the Chinese gambling enclave. The allegations against Wynn come just days after Wynn Resorts reported better-than-expected quarterly earnings, with a surge in revenue from the Wynn Palace, a casino located on Macau's Cotai Strip, overshadowing weaker results out of Las Vegas.
While Wynn Resorts is based in Las Vegas, it generates more than 70 percent of its business in Macau, the world's largest gambling hub. The company said early last week it plans to develop the next phase of the US$4.2 billion Wynn Palace on 4.45 hectares. On a conference call, Steve Wynn expressed optimism the business will be able to continue after the gaming licenses of Macau's six casino operators start expiring from 2020.
Representatives for Macau's Gaming Inspection and Coordination Bureau couldn't be reached over the weekend.
Wynn is the latest in a list of powerful men across an array of industries who have been accused of harassing and abusing women. He paid US$7.5 million to settle claims brought by a former manicurist at his Las Vegas resort who said he pressured her to have sex with him, according to the Journal. The report contained numerous other allegations from other women of harassment and coercion.
Wynn, who turned 76 on Saturday, told the Journal that the idea he ever assaulted any woman "is preposterous." A spokeswoman for Wynn Macau declined to comment beyond a statement from Wynn Resorts that said the accusations reflect allegations made in court hearings by Wynn's ex-wife in her legal battle with him.