The stakes seem to have been too, too hot for Beijing tastes
James Packer can’t be too pleased with the news coming out of Macau in recent days which has scraped a little of the sheen off the former Portuguese colony’s success story.
First there was a clampdown on Chinese nationals being allowed to visit, followed by news that UBS analysts in the US slashed Melco Crown’s target price by almost a third to USD 8.81 (AUD 9.24). Then a slowdown in gambling triggered 270 job cuts at one of Crown Macau’s biggest rivals, Galaxy.
Defying the bad karma, Packer’s partner in his Macau casino venture, Lawrence Ho, has put on a brave face, playing down the Chinese Government-imposed visa restrictions.
The limits could prompt a slump in revenue at the pair’s casino because more than
90 per cent of Macau’s gamblers come from mainland China. But in a rare display of compassion among casino owners, Ho told Bloomberg he understood that the Government had to rein in the growth in gambling revenues. „The growth is so phenomenal that they want to cool it down a little,“ he said.
According to the US gaming analyst Melissa Cook, from Calyon Securities, the visa restrictions are „clearly aiming to restrict mainland hard-core gamblers from throwing their life savings away“.
Other measures taken include limiting the number of gaming tables in the former colony to 5000, and putting a freeze on new casino developments.
Investors were less understanding: Melco Crown, which trades on the Nasdaq, dipped to a record low on Monday of USD 7.46. Crown yesterday hit AUD 8.47, the lowest price since PBL‘s company was split. It closed down 3.5 per cent at AUD 8.62.