Typhoon Hato Hurting Casino Stocks in Macau
Typhoon Hato has been wreaking havoc on coastal Asia over the last couple of days, and Chinese casino stocks are expected to suffer the consequences. The casino has caused flooding as well as power and Internet blackouts, which will put a damper on Macau’s casino revenue.
While some casinos have backup generators keeping things in order, the storm could put a halt to China’s six-month streak of double-digit percentage growth in the burgeoning local casino industry. Brokerage Sanford C. Bernstein estimated 22-to-25 percent growth in Macau’s gross gambling revenue for the month of August.
With China’s industry booming, several big-name American casino magnates have begun to enter the Asian marketplace. Several American companies have spent billions of dollars already by expanding to the Chinese gambling mecca in Macau, which is the only area in the country where gambling is legal.
We are already seeing the effects of the storm on stocks. Las Vegas Sands shares were down more than one percent by midday on Wednesday, while Melco Resorts stocks were also down over one percent. Wynn was down over two percent, while MGM was down less than one percent.
Bernstein analysts said, “the previously exceptional August growth rate” will slow significantly by “at least a couple hundred basis points.” Additional damage in the region in light of the storm could make the decline in stocks even more severe than initially thought.
Macau’s Gaming Inspection and Coordination Bureau has instructed local casinos to close down temporarily if power is not restored to the region in short order.
Three people have already died as a result of the storm, which has left streets flooded and buildings damaged. Two others were reported missing, as well. One man died after being hit by a wall that was blown down, another fell from a fourth-floor balcony while a third, a Chinese tourist, was struck and killed by a passing truck.
The local Venetian resort was operating using a power generator, but without air conditioning or proper lighting. One Sands employee said that power was out for just about the entire region, but that it was beginning to be restored.
Many people have been left stranded in the resorts and casinos because there is no way to get out of town thanks to the flooding in the streets. The Grand Lisboa was still without power as of Wednesday afternoon, which forced the casino and local restaurants to close.
One resident complained that local authorities failed to properly notify locals regarding the dangers of the impending storm, which has caused many to be stuck where they are. Water supply in the area is currently limited, while more than 50 flights were also forced to be canceled at the local airport.
Heavy rains and huge winds forced the closure of the local stock market in Hong Kong, as well. 84 people were injured while nearly 300 were forced to seek refuge in temporary shelters.
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