Macau casino stocks fell sharply yesterday. The gaming companies in Hong Kong lost a total of almost USD 5 billion in value. The shares of the gambling service provider Suncity Group Holdings were even completely suspended from trading. The background is the arrest of Suncity boss Alvin Chau (47) over the weekend. The authorities accuse him of being the mastermind behind a gambling criminal syndicate.
Macau's casino shares lost $ 4.8 billion in market value in Hong Kong yesterday, according to the South China Morning Post .
The two gambling stocks listed in the Hang Seng Index, Sands China and Galaxy Entertainment, fell by more than 5% each. MGM China closed 10% less than at the start of the stock market, while Wynn Macau suffered losses of 7.8%. An indicator that shows six casino values fell by 7.6%.
Steve Wickers, an expert in risk management from Hong Kong, sees the recent fall as a sign of further developments. He commented to the South China Post:
Macau's good years seem to be over. Investors in the casino business should adjust their expectations accordingly.
It is the second time within a few weeks that the market has been extremely sensitive to gambling news from Macau. In mid-September there was already a slump in the stock market that cost around 12 billion euros.
The responsible authorities had previously announced that they wanted to revise the gambling laws of the Special Administrative Region. As a result, investors feared that the industry in Beijing would be dealt with much more severely by the less gambling-friendly authorities.
Suncity Group Holdings, which had been suspended from trading after the arrests became known, published a statement on Monday evening. In this she stated that the majority shareholder Chau had announced the intention to give up his post as chairman and managing director. What his resignation will mean for the casino operator's international business is currently not foreseeable.
Chau had given the Suncity Group massive financial support. That among other things by agreeing to convert shareholder loans into open-ended securities. The money should flow into the casino projects:
The gambling group denied rumors that the group had advertised its Russian casino Tigre de Christal in mainland China.
As far as is known, with the exception of Alvin Chau, “neither the company nor any of its subsidiaries, nor a director, manager or employee of a member of the group will be investigated and / or charged in connection with the incident.”
That concerns about Macau as a gambling metropolis should not be unfounded became evident at the weekend when local authorities arrested businessman Alvin Chau and ten other people.
Alvin Chau's Suncity portfolio also includes Macau's largest junk operator. The company, which brokers and organizes gambling offers for high rollers, is said to have been responsible for almost half of Macau's junk market in 2019. According to its own statements, it made up 15% of the total gross gaming revenue in the special administrative area. Again and again there are reports of alleged close links between the international junk operator and organized crime .
The arrested are accused of having built an illegal gambling network with more than 80,000 players in the east Chinese city of Wenzhou. In mainland China, playing for money is strictly prohibited with a few government exceptions.
Under the leadership of Chaus, 199 representatives at shareholder level and over 12,000 brokers were involved in the syndicate.