Why Were Macao Casino Stocks on a Losing Streak in December?



Macao casinos lose in December

After rising for four consecutive months from August to November, Macao casino stocks saw losses in December. For December 2016, Melco Crown Entertainment (MPEL) was the biggest loser, losing almost 19.4%, followed by Las Vegas Sands (LVS), which lost 14.7%. Wynn Resorts (WYNN) lost almost 15.6%, and MGM Resorts (MGM) lost 1.2%.

The fall in December was due to a report by the South China Morning Post that the Macao government will be imposing ATM cash withdrawal limits for some bank card users. Macao clarified the next day that these reports were false. Though the ATM per transaction limit was cut in half to $626, the daily withdrawal limit of $1,449 was unchanged. However, casino stocks haven’t yet recovered from the loss.

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2016 performance

In 2016, MGM Resorts was the only stock to gain value, while all other stocks lost value. MGM rose 36.6%. Wynn Resorts has been the biggest loser, losing almost 42.5% in the year, followed by MPEL, which lost 36.5%. LVS lost almost 8.3% in the same period.

The Market Vectors Gaming ETF (BJK), which acts as a proxy for the gaming and casino industry, also lost 11.9% YTD. The broader market, replicated by the SPDR S&P 500 ETF Trust (SPY), rose ~7.2% in the same period.

Series overview

In this series, we’ll discuss how the gaming industry in Macao has been performing lately by analyzing key indicators such as the gross gaming revenues and visitor arrivals. We’ll also take a look at how the Chinese economy will affect the companies in the Macao region.


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