Profit growth for Macau’s casino resorts has slowed down significantly, causing stocks to plummet.
With Macau’s casino gambling industry and property developers showing signs of a slowdown, Hong Kong stocks saw a significant drop at the beginning of this month. In fact, they reached their lowest level since last July.
Plunging more than 7%, Galaxy Entertainment Group and Sands China reported the biggest losses at the Hong Kong Stock Exchange. According to recent gambling news, casino sales in Macau have slowed down, reporting a modest growth of just 7% in January. MGM China Holdings and Wynn Macau also fell 4.3% and 2.9% respectively.
Statistics show this is the slowest pace in casino profit growth since last October, but property developers aren’t doing much better either. Cheung Kong Holdings shares dropped for eight days in a row, to their lowest level since September.
Steven Leung, chief of institutional sales at UOB-Kay Hian Holdings in Hong Kong, said that Macau’s revenue growth is much weaker than expected. “If this is a one-off, it shouldn’t be too big a problem. Otherwise, there is a risk for the whole sector to be downgraded,” the industry expert stressed.
Despite the slow financial progress, local casinos are still an important source of revenue for the state and it looks like changing Macau gambling laws to end the state monopoly was a good idea. The state’s casinos reached a record profit of $45 billion last year.