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Casino shares rattled by report of Macau ATM limits

Shares in casino operators took a tumble on Friday before recovering some poise, following a response from China’s UnionPay to a report that its daily withdrawal limit from ATMs in the gambling haven of Macau was to be halved as part of Beijing’s battle against capital flight from the mainland.

China has moved in recent weeks to staunch capital gushing from the mainland, including tightening scrutiny of cross-border investment by Chinese companies and banning the purchase of certain insurance products. In some cases, repatriation of profits by foreign companies has been affected.

Macau-exposed gaming stocks listed in the US, Hong Kong and Australia fell heavily after Hong Kong’s South China Morning Post reported that the daily limit for ATM withdrawals by mainland bank card customers of China UnionPay in the former Portuguese colony — the only place in China where casinos are legal — would be lowered to 5,000 patacas ($625.89) from 10,000 patacas as of Saturday.

China UnionPay said on Friday that its policies on overseas cash withdrawal by cards issued from mainland China “remain the same” and that the daily maximum was still “capped at 10,000 renminbi equivalent per card per day”.

In an emailed statement, China UnionPay added that it “will continue to provide safe cross-border payment services while complying with the regulations and laws issued by relevant authorities”.

The Macau Monetary Authority and the People’s Bank of China declined to comment.

Rattled by the SCMP report, US-listed casino stocks including Wynn Resorts, Las Vegas Sands and Melco Crown Entertainment fell by more than 10 per cent on news of the report — declines initially matched in Asia by Hong Kong-listed Galaxy EntertainmentSands China and MGM China. Australia’s Crown Resorts lost as much as 8 per cent in Sydney.

Following the UnionPay statement, casino shares in Hong Kong were down between 3 per cent and 6 per cent while Crown was off 5.2 per cent.

China’s foreign exchange regulator also waded in to try and calm the waters: “At the moment, we haven’t seen any increase in corporate and individual purchases. Cross-border capital flows are generally relatively stable, and have maintained the basis for stable operation,” it said in a statement to China’s official Xinhua news agency.

Restrictions on the amount of money that can be moved through Macau began with an anti-corruption campaign launched by Chinese president Xi Jinping, as the city was a popular means of laundering ill-gotten money. But recently the focus has shifted from preventing corruption to reining in capital flight. 

This week, data showed China’s foreign exchange reserves fell nearly $70bn in November as the country’s central bank defended the renminbi from steeper depreciation on the back of accelerating capital outflows.

But there are still options for the creative. Individuals are not limited in how many bank cards they may carry and credit card transactions or pawning are not affected, Morgan Stanley analyst Praveen Choudhary noted.

Twitter: @HornbyLucy

Via FT