Topline
Major Hong Kong-listed gambling stocks slumped heavily on Monday after the city of Macau shut down all of its casinos and ordered its residents to stay at home for a week, as local officials attempt to halt an ongoing Covid outbreak and closely align the city’s pandemic measures with mainland China’s zero-Covid policy.
Grand Lisboa Hotel is under lockdown after COVID-19 cases were found there in Macao, China.
Key Facts
In afternoon trading on Monday, Hong Kong-listed stocks of casinos Wynn Macau, Sands China, MGM China Holdings and Melco International were down 7.06%, 8.47%, 6.29% and 7.66%, respectively.
Hong Kong’s benchmark Hang Seng Index was down 3.05%—dragged down by the slump in casino stocks and Beijing’s earlier decision to fine tech giants Alibaba, Tencent and others for failing to adhere to the country’s antitrust rules.
Macau, a Chinese special administrative region, on Monday began a seven-day lockdown and shut down the city’s casinos for the first time since the early days of the pandemic, as it continues to detect new Covid-19 cases in the community.
Macau on Monday reported 59 new Covid-19 cases, pushing the total number of infections detected in the current outbreak—which began last month—past 1,500.
Mirroring the approach taken by authorities in mainland China, Macau is carrying out several rounds of mass testing—seventh-round completed on Monday—as it attempts to isolate the outbreak.
Key Background
The latest outbreak in Macau was first reported on June 19 and came after several months of zero Covid-19 cases in the Chinese Special Administrative Region. At the start of the outbreak, authorities swiftly shut down most businesses, schools and public venues in the city, but the casinos—the industry which directly or indirectly employs a majority of Macau’s residents and makes up 80% of the city’s economy—were allowed to stay open. The city’s casinos had previously been shut down for 15 days at the start of the pandemic in 2020—but largely remained operational ever since. Like their mainland counterparts, authorities in Macau have vowed to stick to China’s “zero-Covid” policy which aims to eliminate the local spread of the virus. However, international experts have questioned the wisdom behind the policy which has led to painfully long lockdowns in major Chinese cities, including its financial hub of Shanghai, and has caused severe economic disruption. More than 614,000 people in Macau—94.6% of its total population—have been vaccinated against Covid-19, according to the city’s health ministry.
Big Number
28%. That’s how much the net worth of Hong Kong billionaire and casino tycoon Lui Che Woo has dropped since the start of the pandemic, according to Forbes Asia. Casino stocks like Lui’s Galaxy Entertainment have been severely hit by the drop in tourism during the pandemic.
Further Reading
Macau Shuts Casinos as City Enters Weeklong Lockdown (Wall Street Journal)
Macau shuts all its casinos to curb COVID, gaming shares plunge (Reuters)
Source: https://www.forbes.com/sites/siladityaray/2022/07/11/hong-kong-listed-casino-stocks-slide-as-macau-clamps-down-on-covid-spread-with-week-long-lockdown/