Macau’s Casino Dependent Economy Crashes by 26.4% in 2Q, Kidnappings Surge!

When I wrote about the Philippine casino bubble in April 2013, I noted of the potential impact from the deterioration of the Chinese economy to Philippine and regional casino industry: “And the loses suffered by Singapore casino operators from unscrupulous bettors are just signs from the periphery, particularly the vulnerable Chinese economy, of the possible things to come.” 

Add the current economic stagnation to the political persecution of the opposition by the incumbent administration (operating under the slogan of “anti-corruption”), and to the financial repression in the context of the ongoing interdiction of capital flight,  (Yesterday the Chinese government reportedly imposed reserve requirement on financial institutions trading in foreign-exchange forwards), the outcome has been a perfect trifecta (economic, financial and political) storm: Macau’s casino dependent industry tailspinned in the 2Q!

From Bloomberg:

Macau’s economy dipped to its lowest since 2011 as high-end gamblers avoided the world’s largest casino market amid a widening crackdown on graft in China.

The city where gambling accounts for four-fifths of economic output saw GDP tumble 26.4 percent in the last quarter, according to government data released Monday. The drop worsened from 24.5 percent in the first quarter.

That’s the statistical economy on a freefall to its “weakest since early 2011”!

And Macau’s predicament has hardly abated. Casino revenues this August remains mired in deep losses.

The above signifies a wonderful depiction of the boom-bust cycle in motion as exhibited by casino earnings

Moreover, Macau’s junctures have begun to spillover to the political economy, as Macau’s government surpluses shrinks

While its economy fared worse than crisis and debt-laden Greece in recent months, Macau’s unemployment rate has held steady below 2 percent and its government maintained a surplus.

Still, the fiscal surplus of 8.63 billion patacas ($1.1 billion) in the second quarter has almost halved from a quarter earlier amid falling gaming taxes. Beijing-backed Chief Executive Fernando Chui had said he would cut some government spending if the casino downturn worsens.

Cut government spending? If this happened in the West, Macau’s administrator would be pilloried for mouthing a politically incorrect stance—austerity!

This also means that a prolonged economic rut will lead to deficits that would increase Macau's debt and magnify risks to its vulnerable economy and to financial instability.

Yet how has the industry been coping with the slump?

Macau’s casino operators have been trying to spark a revival with a series of new resorts aimed at drawing mainland Chinese tourists, heeding Beijing’s call for the city to reduce its dependence on gambling. Those numbers haven’t yet been forthcoming.

Package group tours from mainland China fell 19 percent in July from a year ago, even as the number of hotel rooms in the former Portuguese enclave increased 7.2 percent to 30,000, according to official data Monday.

Such slowdown hasn't been limited tot Macau, Hong Kong’s retail sales, according to Nasdaq, fell by a faster-than-expected 2.8% in July from a year earlier, dragged by a further slow down in inbound tourism and partly by the impact of the stock market's correction on consumer sentiment, the Census and Statistics Department said Monday. 

The above are manifestations of the deepening stagnation of mainland China’s economy.

Macau’s woes have predominantly been framed as an outcome of political actions. Instead of hunkering down, Macau’s operators will shift its business model paradigm by ADDING to current supply of hotels, shopping malls and other leisure based investments. 

As noted above, Macau’s dilemma have emanated from a combination of the growing slack in demand AND excess capacity.

And if expansion plans by the operators will be fulfilled, then this will only compound on the region’s excess capacity in the hotel-shopping mall-resort industry. And the bad news is that this implies of the spreading of financial losses, not limited to Macau, but to the region.

And China’s yuan depreciation will only exacerbate the region’s current conditions.

Meanwhile, there exists a feedback mechanism between economic downturn and debt. In Macau, this has hardly been apparent yet in her financial system. However, its social costs have emerged—a surge in kidnapping!

From Time.com:

Macau’s glitzy hotels and casinos are taking out insurance policies to protect themselves against a new threat to the house — the abduction of wealthy guests over unpaid gambling debts.

The risk of kidnapping has increased significantly in recent months as fewer numbers flock to the Chinese Special Administrative Region that also serves as the world’s largest gambling hub, reports the South China Morning Post.

This partly due to China’s slowing economy, meaning falling revenues for moneylenders that rely heavily on tourists from the mainland. As Beijing limits the amount of cash visitors can legally take to Macau, many high-stakes gamblers use local loan sharks for ready cash, which can be perilous if the cards and dice prove unfriendly.

As most kidnappings occur in guests’ rooms, hotels could face lawsuits from victims and their families. The insurance policies mitigate this risk with coverage for legal liability and crisis responders.

The Macau government reports that as many as 170 people were held against their will during the first six months of this year — more than double the figure for the same period of 2014. However, these are only the cases the authorities know about, with experts saying the true total is likely much higher.

Increase in the incidences of crimes and even possibly heightened risks on social instability will likely characterize an environment plagued by a deepening economic slump and or a financial crisis. 

Macau represents just one of the many proverbial canary in the coal mine.

Finally, here are updated stock market price charts from Macau’s casino majors.

MGM China Holdings (HK:2282)

Galaxy Entertainment Group (HK:27)

Sands China Ltd. (HK: 1928)

Wynn Macau Ltd. (HK: 1128)

SJM Holdings Ltd. (HK:880) owner of Grand Lisboa

Early August, much of these stocks mounted had ferocious 10-20% rallies. Some mistakenly thought that it was the beginning of a turnaround.

It turned out that such rally signified a “bull trap”.

The resumption of losses has virtually erased all short term gains. Or, presently, these stocks have been drifting lower than the level when the August rally commenced.

It’s a great example of bear markets “descending on a ladder of hope”.

By the way, Macau’s crashing stocks have also spread to affect its US based parent firms….

…thus contributing the swoon of the Dow Jones Gaming Index. That’s aside from US economy dynamics.

On a personal note: I am not an ivory tower expert who talks the world without  personally seeing them. So I went on the ground (one of Philippine casinos) last weekend to see for myself. And what I saw seems much aligned with what I have been writing about.

Chinese Tech Bubble Dwarfs US Dotcom Bubble as Manic Buying Spreads to Hong Kong and to Macau’s Casino Stocks!

In addition to my late March post of “price to whatever ratio” where I show how the current Chinese stock bubble seem as integral to the government’s political actions which has resulted to valuations being blown out of proportions, this Bloomberg article finds that valuations of Chinese technology stocks has now dwarfed the US dotcom bubble of 1997-2000. (bold mine)

The world-beating surge in Chinese technology stocks is making the heady days of the dot-com bubble look tame by comparison.

The industry is leading gains in China’s $6.9 trillion stock market, sending valuations to an average 220 times reported profits, the most expensive level among global peers. When the Nasdaq Composite Index peaked in March 2000, technology companies in the U.S. had a mean price-to-earnings ratio of 156.

Like the rise of the Internet two decades ago, China’s technology shares are being fueled by a compelling story: the ruling Communist Party is promoting the industry to wean Asia’s biggest economy from its reliance on heavy manufacturing and property development. In an echo of the late 1990s, Chinese stocks are also gaining support from lower interest rates, a boom in initial public offerings and an influx of money from novice investors. 

The good news is the technology sector makes up a smaller portion of China’s equity market than it did in the U.S. 15 years ago, limiting the potential fallout from a selloff. The bad news is that any reversal in the industry will saddle individual investors with losses and risk putting an end to the Shanghai Composite Index’s rally to a seven-year high.

Wow 220 PERs!!! Philippine index managers must be drooling for local stocks to attain such levels.

Well overvaluations don’t just happen. Rather they are consequences from prior actions, or in particular, such are symptoms of deeper problems. And one of the major problem stems from government policies. And this has duly been imputed by the article which cites “lower interest rates”, and consequently, government support to the technology sector. 

The article shows how government subsidies feeds into the current mania.

China’s government is boosting spending on science and technology as a faltering industrial sector drags down economic growth to the weakest pace in 25 years. In March, Premier Li Keqiang outlined an “Internet Plus” plan to link web companies with manufacturers. Authorities also plan to give foreign investors access to Shenzhen’s stock market, the hub for technology firms, through an exchange link with Hong Kong.

Among global technology companies with a market value of at least $1 billion, all 50 of the top performers this year are from China. The sector has the highest valuations among 10 industry groups on mainland exchanges after the CSI 300 Technology Index climbed 69 percent in 2015 through Tuesday, more than three times faster than the broader measure…

Technology companies have posted the biggest gains among Chinese IPOs during the past year, helped by a regulatory ceiling on valuations for new share sales. Beijing Tianli Mobile Service Integration Co. is the top performer among 147 offerings during the period after surging 1,871 percent from its offer price to trade at 379 times earnings… 

Valuations in China are now higher than those in the U.S. at the height of the dot-com bubble just about any way you slice them. The average Chinese technology stock has a price-to-earnings ratio 41 percent above that of U.S. peers in 2000, while the median valuation is twice as expensive and the market capitalization-weighted average is 12 percent higher, according to data compiled by Bloomberg.

The idea that technology represents a small segment of the equity markets misappreciates the perspective that risks of imbalances have been a systemic issue.

Proof? From the same article

The use of margin debt to trade mainland shares has climbed to all-time highs, while investors are opening stock accounts at a record pace. More than two-thirds of new investors have never attended or graduated from high school, according to a survey by China’s Southwestern University of Finance and Economics.

Money has flowed into Chinese stocks in part because the central bank is cutting interest rates to support growth, something the U.S. Federal Reserve did in 1998 to revive confidence amid Russia’s sovereign debt default and the collapse of the hedge fund Long-Term Capital Management.

Symptoms of policy induced credit fueled asset (stock market) manias have been ubiquitous: margin trade are at all time highs combined with massive formal banking loans and shadow banking funds being funneled into stocks as retail punters enroll in record rates. Market participants then stampede into the price bidding hysteria or indulge in excessive speculation to pump up asset (stock market) prices to levels where valuations don’t seem to matter at all.

Yet systemic issues will have systemic ramifications.

To add icing to the cake, media portrays Chinese stock market irrationality on the increased participation from societal strata with lower educational background.

While education may somewhat help, the reality is that what demarcates between lemmings or people falling for the herding behavior trap and independent thinking is self-discipline which is a personal trait.

As I have pointed out numerous times here, throngs of well-educated or even high IQ people have been mesmerized by the illusions of prosperity from government sponsored bubbles or have even fallen victim to Ponzi schemes. As example, Queen Elizabeth chastised the economic industry for being blind to the 2008 crisis. 

Bubbles essentially pander to the emotions and egos rather than to logic. Thus self-discipline has mainly been about controlling emotions and egos (this is theoretically known as Emotional Intelligence) and hardly about education.

Anyway, to compound on the Chinese version of the modern day dotcom bubble has been an IPO bubble that includes small and medium scale enterprises

From Nikkei Asia (April 3; bold mine)

On Thursday, the China Securities Regulatory Commission approved an unprecedented 30 companies for listing on the Shanghai and Shenzhen stock exchanges. It previously had maintained a moderate pace of initial public offerings to avoid upsetting market dynamics. But the frenzied run-up in stock prices seems to have eased oversupply concerns and encouraged the regulator to let loose.

Investors responded by lifting the Shanghai index to a seven-year high Friday. Bullishness is particularly apparent in the Shenzhen market. Seventeen of the 30 companies approved for IPOs will list on its ChiNext board for startups. The ChiNext index advanced 1.4% to a record 2,510. The average component is trading at nearly 100 times earnings.

ChiNext is a benchmark patterned after the NASDAQ listed at the Shenzhen Stock Exchange.

Wow average PERS at 100x!

Yet aside from monetary easing, price manipulation of IPOs have been used by the government to ramp up the public's interest in the stock market last year.

So even while another Chinese company, Cloud Live Technology group reportedly defaulted on her domestic debt last week, where the Chinese government via the PBOC injected 20 billion yuan ($3.28 billion dollars) most likely to ease pressures in response to such default, the stock market mania has been intensifying.

Chinese stocks used to be correlated with price actions of commodities (chart yardeni.com). Not anymore. Chinese stocks have mutated into mainly a central bank-Chinese government liquidity play with little relevance on the real economy. Such signifies another sign where the stock market fundamental functions of price discovery, and as discounting mechanism, has almost entirely broken down.

And Chinese stock market bubble has even percolated to Hong Kong. Hong Kong’s stocks as measured by the Hang Seng Index have virtually exploded to record highs!

Aside from the rationalized gap between mainland and Hong Kong stocks, fund flows via the Shanghai-Hong Kong connect, the Chinese government again has been attributed as a major influence. 

From the Wall Street Journal: Adding to investor confidence Thursday was an article in the state-run China Securities Journal headlined “Go! Buy Hong Kong Stocks!”, signaling to some analysts that the mainland government is encouraging the rally.

And to include today’s gains (+3.8% yesterday and +2.7% today), in two days, Hong Kong’s stocks has spiked by 6.5% and by over 10% since mid March!

The mania appears to be spreading.

Stocks of Macau’s casinos have also skyrocketed by about a stunning 10% in two days!

Aside from yesterday's dramatic twist of events, today MGM China Holdings (HK:2282) closed +5.44%, Galaxy Entertainment Group (HK:27) +5.56%, Melco Crown Entertainment (HK: 6883) +2.21%, Sands China Ltd. (HK: 1928) +5.92%, Wynn Macau Ltd. (HK: 1128) +8.69% (!!), and SJM Holdings Ltd. (HK:880) owner of Grand Lisboa, +5.13%.

Spectacular volatility!

Paradoxically, this has been happening even as Macau's gaming industry in March suffered another monumental collapse in terms of monthly gross and accumulated gross revenues!

It’s becoming clearer that the Chinese government appears to be bent on substituting or replacing a bursting property bubble with a stock market bubble. They seem to be buying time and anchoring on hope that new bubbles will not only offset the old ones but generate real growth.

Unfortunately, all bubbles end in tears.

Yet the above events represent added accounts of record stocks in the face of record imbalances at the precipice.

What’s the Link between Hong Kong’s Slumping Retail Sales and Crashing Macau’s Casino Stocks?

A few weeks back I wrote,

Interestingly, Hong Kong’s tourism seems as suffering from a facelift. Chinese tourists have become dominated by ‘Day Trippers’ which now accounts for a record 60%of Chinese tourists. According to a report from Bloomberg, Day-trippers spent an average of around HK$2,700 ($350) per capita in Hong Kong in 2013, compared with about HK$8,800 by overnight tourists, according to government data.

Wow, that’s a 69% collapse in spending budget by tourists! And this has resulted to a slump in luxury brand sales but a surge in medicine and cosmetic sales! What the report suggests has been that China’s economic slowdown and the government’s anti-corruption drive (political persecution) have changed the character of Hong Kong based Chinese tourists.

Well if the trend continues, then this will radically shake up the Hong Kong economy!

It appears that the tourism ‘facelift’ has resulted to the cratering of retail sales down by 14.6% in January on a year and year basis!

This is how mainstream media explains the slump, from the South China Morning Post:

A slump of 14.6 per cent in retail sales ahead of the Lunar New Year is the worst since a 2003 outbreak of severe acute respiratory syndrome, putting businesses and concern groups at loggerheads over whether to curb the inflow of mainland visitors.

Sales in January fell to HK$46.6 billion from a year ago, the Census and Statistics Department said yesterday.

It is the first decline in any January since 2007, when sales dipped 1.6 per cent.

The Retail Management Association reacted strongly, saying the data reflected retail difficulties in the face of slowing growth in cross-border arrivals. The association would object to limiting visitor numbers, chairwoman Caroline Mak Sui-king said.

That stance will put the industry in conflict with political parties and anti-mainland protesters that advocate caps on a multiple-entry visa scheme granting permanent Shenzhen residents unlimited trips to Hong Kong.

As one would note this has been blamed on mainland tourist flows.

Chart from Investing.com 

I would like to point out that rate of growth of Hong Kong’s retail industry has been on a downtrend since its peak in the 1Q of 2013. It plunged to a negative in the 2Q 2014, bounced slightly during the 4Q and has retrenched again to its biggest loss since, as stated above, 2003.

What’s been interesting has been that changes in mainland visits to China has been volatile. As the chart above from Quartz pointed out, the Umbrella protests has even induced more arrivals from both mainland and ex-China tourists.

And if one looks at Hong Kong’s January 2015 tourist arrivals, it’s been growth from Asian visitors that has exhibited negative (-.4%). This has been led by Indonesia (-19%) Singapore (-5.3%) and Japan (-3.5%).  

Mainland tourists have been up by only 3.3% which is at the lower level of the 2014 growth trend. 

Thus what explains the slump in retail sales has been the change in the character of mainland tourists (or the Day Trippers with limited spending power) and partly, the slack of growth from Asian visitors.

As of 2013, based on Hong Kong Census and Statistic Department, wholesale and retail trade account for 5.3% of Hong Kong’s statistical GDP while accommodation and food services account for 3.6%. 

So a slump in retail sales will have some effect on the economy.

And what’s even more interesting has been that slumping Hong Kong Retail sales seems to coincide with activities in Macau’s casinos.

Macau’s gambling revenues HALVED last February. Monthly gross revenues fell 48.6% while accumulated gross revenues collapsed by 35.1% according to Gaming Inspection and Coordination Bureau Macao SAR

Nikkei Asia on the culprit: Beijing's crackdown on corruption and a move toward a full smoking ban are just two sources of concern. Late last month, it was reported that the Macau government was weighing restrictions on the entry of mainland tourists.

Note that negative numbers of Macau's casinos appeared in the 3Q 2014, almost a quarter after Hong Kong’s retail sales turned negative.

Yet another article from Bloomberg reinforces the changing character of Chinese tourists affecting Macau’s tourism and casino business which seem to resonate with Hong Kong's dynamics (bold mine)

The recent wave of mainland Chinese visitors also spend less than before, a further blow to the fine-dining eateries, luxury retail malls, and high-end hotels that casinos have set up next to their gambling halls. Excluding gambling, per-capita shopping expenses by Chinese tourists dipped 32.8 percent to 1,079 patacas in the fourth quarter of 2014, according to data from the Macau government.

Average occupancy at 3-star to 5-star hotels for the so-called Golden Week period of Chinese holiday, which ran from Feb. 18 to 24, fell 6.9 percentage points to 87.5 percent, while average room rates declined 15.4 percent, the Macau Government Tourist Office announced on Feb. 26.

While crackdown corruption may be a factor, this has been more of epiphenomenon (or secondary phenomenon) or a contributing force. 

The changing character of Chinese spending in Hong Kong and Macau has been reflecting more about economic conditions of China.

And note the hit in Macau’s revenues have been affecting malls and hotels.

Just to show an update of the 3 year charts of Macau’s major casinos

MGM China Holdings (HK:2282)

Galaxy Entertainment Group (HK:27)

Melco Crown Entertainment (HK: 6883)

Sands China Ltd. (HK: 1928)

Wynn Macau Ltd. (HK: 1128)

SJM Holdings Ltd. (HK:880) owner of Grand Lisboa

What goes up MUST come down!

Again it’s not just Macau, Singapore’s casinos have likewise been taking a beating.

Singapore’s Genting (G13.SI) operator of Resorts World Sentosa reported a 30% crash in net profits in 4Q according to Reuters. So the grueling bear market in her stocks.

Meanwhile Marina Bay Sands operated by Las Vegas reportedly doubled profits in 4Q 2014 due to non recurring tax benefits and from a statistical sigma event from higher-than-usual win percentage at its tables according to Channel News Asia

That doubling of profits have left the markets unconvinced as shown in the charts of Las Vegas Sands from stockchart.com

The trend flows of LVS mirrors the activities of the US Dow Jones Gambling index.

Incidentally, a unit of US casino operator Caesar Entertainment filed for bankruptcy for Chapter 11 last January. Such are just signs that casino troubles have not been limited to Macau, Singapore but also the US. 

Have the Chinese government been able to 'crackdown' on Chinese gamblers in the US?

So if Chinese tourist spending have been down, and if Chinese high rollers have been curtailed by their government's crackdown where will the casinos of the Philippines, Vietnam,South Korea and others get their clientele base, especially that they have been in a frantic race to build capacity?

Will the casino crash in Macau prompt for a shift by Chinese gamblers to Manila?

Yet if economic factors have been the main drivers of crashing casino stocks in Macau and Singapore and of Hong Kong retail activities, that declared shift looks like wishful thinking. And as noted above, there are other countries likewise competing for Chinese money. 

So essentially a shrinking market in the face of a massive buildup in capacity.

Remember, for the local industry, there have been about Php 57.22 billion of debt backing this race with the region. And a failure of expectations will not just mean losses and surplus supply, but importantly credit problems.

Yet many media reports look like company press releases that have been anchored on hopium.

The Canary in the Coal Mine for the Casino Bubble: Macau’s Casino Woes Deepens

2014 has not been a good year for Macau’s casinos.

From Bloomberg:

Macau’s casinos recorded their worst year, ending a decade of expansion that turned the former Portuguese enclave into the world’s biggest gambling hub. More tough times are ahead.

Casino revenue in the city fell 2.6 percent to 351.5 billion patacas ($44 billion) in 2014, after a record 30.4 percent monthly drop in December, according to figures from Macau’s Gaming Inspection and Coordination Bureau today.

That sharp 40.3% February 2014 monthly gross revenue growth served as the peak, from which rapidly deteriorated through the year. Chart from Macau’s Gaming Inspection and Coordination Bureau

Media blames this on anti-corruption crackdown. Again from the same article.

Chinese President Xi Jinping’s bid to catch “tigers and flies” in an anti-corruption drive and weaker economic growth means Macau may face shrinking revenue until at least mid-2015, when new resorts open. The crackdown has deterred high rollers who account for two-thirds of Macau’s casino receipts, and wiped out about $73 billion in market value of companies including Wynn Macau Ltd. (1128) and SJM Holdings Ltd. last year…

Also on money flows to stealth money flows…

Macau’s government has been curbing money flows to the territory over concern that illegal funds are being taken out of the mainland. It is restricting the use of China UnionPay Co.’s debit cards and its hand-held card swipers at casinos. Further clampdowns are expected with the help of banks.

Let us put this in perspective. If indeed Macau’s casinos have only served as conduits for stealth transfers or 'capital flight' then only part of that money would have been funneled to the casinos, the rest would have moved elsewhere. This means Macau’s casinos should hardly have boomed. 

But Macau’s previous boom most likely highlights easy money debt financed spending activities with capital flight as a subordinate cause.

Some have even suggested that such money flows has funded record high inflows to US real estate and perhaps rechanneled gambling activities to the US. 

But actions of stocks of the US gaming industry suggests otherwise.

The 47 component Dow Jones Gambling index has swiftly capsized into a bear market since its peak in March. This would mark a real time example of how mania morphs into a collapse.

Since part of the US gambling index incorporates Macau exposure by US firms, then part of the decline may be attributed to Macau’s morose fate.

Apparently domestic (US) operations have failed to offset external conditions which explains the accentuated contagion effect.

But gambling industry woes hasn’t been just about Macau. 

Singapore’s Genting’s G13.SI stocks has halved, since its October 2011 peak. This year’s decline has only punctuated the ongoing hemorrhage.

And when considering Genting’s competition, the Marina Bay Sands operated by Las Vegas Sands whose stocks has been shaved by a third, there seems hardly any difference.

Singapore’s casinos compete with Macau’s rivals for Chinese visitors.

So has the Chinese government’s crackdown on the political opposition bannered as ‘anti-corruption’ also spread to Singapore?

Interestingly, Macau’s casino operators seem to be focusing diverting expansion towards the leisure industry. Back to the Bloomberg report: 

Casino companies including Sands China and Galaxy are shifting resources from high rollers to lure more vacationing Chinese and other mass-market gamblers by building malls, theaters, restaurants and hotels.

New project openings starting in mid-2015 with Galaxy’s second-phase expansion of its resort on the Cotai Strip may help underscore a market revival, by targeting tourists who’re seeking a broader holiday experience in addition to gambling, according to CLSA’s Fischer.

In Asia, there seems to be an intensive race to build capacity to chase after the Chinese consumers/gamblers as seen by grand projects casino-leisure integrated resorts, not only in Macau but also in Vietnam, South Korea and the Philippines.

These operators hardly realize of the rapidly faltering conditions of the Chinese economy as shown by the 21 charts from zero hedge.

But the real reason for the casino industry’s weakness as I previously wrote:

The reality is that China’s sputtering economy has been reducing demand for the region's casinos. Political persecution of the opposition (via crackdown on graft) represents only the icing on the cake. Add to this the slowing regional economic growth which should exacerbate demand sluggishness.

On the supply side, zero bound has led to casino operators to overestimate on demand, thus the region's overcapacity which has most likely having been funded by cheap debt.

Now the chicken comes home to roost.

And as I also pointed out earlier, the Philippine counterparts has racked up a colossal Php 45-50 billion of debts to finance grand projects. 

If those Chinese gamblers don’t come this year, if the domestic economy continues with its downshifting momentum and if political financial elites don’t patronize these entities enough to provide them financial viability, those humongous debts will come into the spotlight. This should make 2015 very interesting!

Anyway Macau’s stocks as the canary in the coal mine

MGM China Holdings (HK:2282)

Galaxy Entertainment Group (HK:27)

Melco Crown Entertainment (HK: 6883)

Sands China Ltd. (HK: 1928)

Wynn Macau Ltd. (HK: 1128)

SJM Holdings Ltd. (HK:880) owner of Grand Lisboa

The obverse side of every mania is a crash.

Or has it been that gambling has turned into household activity where Chinese punters bid up frenetically stocks prices!

The week prior to the 2014's end, the Zero Hedge reports (bold and italics original) “a stunning 900,000 new stock trading accounts opened - the most since October 2007 (right before the Shanghai Composite collapsed 70% in the following 9 months)

As revealed above, market crashes have become real time events.

Caveat emptor.

Macau’s Casino Stocks Collapses Again!!!

Another day, another smash up of Macau’s blue chip casinos stocks! 

The last time these stocks had been devastated (by a milder degree) was during the 3rd of December.

Today’s sell down has been stunningly horrific...

MGM China Holdings (HK:2282)

Galaxy Entertainment Group (HK:27)

Melco Crown Entertainment (HK: 6883)

Sands China Ltd. (HK: 1928)

Wynn Macau Ltd. (HK: 1128)

SJM Holdings Ltd. (HK:880) owner of Grand Lisboa

The Chinese government reportedly will “launch a major crackdown on the multibillion-dollar flow of illicit funds through Macau casinos” says the Business Insider. So it is likely that the reported plans to tighten money flows (against the political opposition) has exacerbated current woes.

Today's carnage only deepens their respective bear markets.

Meanwhile, Genting Malaysia (4715.KL) and Genting Singapore (G13.SI) closed up 2.78% and .97% respectively today. This reinforces the Chinese politics driven response on Macau's stocks.

But today’s bounce doesn’t neutralize the dominant downside actions for these non Macau Asian casino stocks.

The general weakness in Asia’s casino stocks have been symptomatic of the region’s economic conditions. Additionally, casino stocks may just function as the causa proxima or event risk that may trigger a contagion within the region.