Macau casino stocks plummeted after a massive sell-off early in the week over fears of tighter credit and an economic slowdown in China. Gaming giant SJM saw shares fall as much as 20% to HK$11.28, while Galaxy Entertainment tumbled 21% to HK$9.18. US-based casino enterprises were also hit hard during the decline with Sands China and Wynn Macau both falling 14%. The benchmark Hang Seng Index was down 4%.
Fears of an economic slowdown in export-driven China have resulted from turmoil in Europe and the United States, according to analysts, casusing a credit squeeze that will make it harder for Macau’s high rollers to borrow money for gambling. According to Bloomberg, an estimated two-thirds of Macau’s gambling revenues come from high-spending, mainland Chinese who gamble with borrowed money from “junket operators,” which are tourist agencies that provide travel packages and loans to gamblers.
Despite the credit fears and stock market decline, Macau gambling revenues continue to soar with 60% growth recorded in 2010. Macau casino stocks had risen 20% this year before the sell-off, and analysts remain optimistic on the region’s prospects for the next year.