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Macau Casino Shares Fall On ATM News

Sheldon Adelson, chairman and CEO of Las Vegas Sands Corporation and its Macau subsidiary Sands China, may have lost up to $3 billion in net worth after rumors surfaced that the Chinese government would reduce the amount of money available to withdraw from Macau's ATMs. The move is aimed at preventing senior Chinese officials from laundering money through casinos in the city.

Jewish Business News reports that not only did Adelson lose his money, but his casino in Chinese territory also lost 14 percent of its market capitalization in one day.

Forbes reported that the rumor "has triggered a panic among investors worldwide," and other Macau casino stocks have also fallen. Wynn Resorts shares lost 11% of their value over the same period. Although the stock rose late the same day, it fell again the next day.

To prevent losses, the Macau Monetary Authority issued a note clarifying that the cash withdrawal limit for individuals with Chinese bank accounts would decrease per transaction, but the daily withdrawal limit would not change.

"The move is not expected to affect the day-to-day cash withdrawals of Macau residents and will not affect the normal overseas cash withdrawals of mainland bank cardholders," the authority said in a statement.

Economic and Finance Minister Lionel Longbaytak said the withdrawal limit would stabilize Macau's financial system, according to Macau News. ATM withdrawals issued by bank cards in mainland China are currently limited to 5,000 patcars $625 per transaction, with daily withdrawals remaining at 11,570 patcars $1,448.

JPMorgan analysts said in a note that the change "should not have a significant impact on game demand or spending." As for player psychology, I don't think gamblers will see this change as a sign of 'capital control' or 'potential government surveillance'

Bernstein analysts agreed that "the effect of this new change will not have any real impact on Macau's GGR, at least for now."

MGM Resorts CEO Jim Mullen told Bloomberg TV: "There will definitely be some modest profit impact, but it's not serious and certainly not long-term. I think it will be resolved soon."

Union Gaming analyst Grant Gobersen said the limit is a way for the Chinese government to reduce ATM transactions used by mainland Chinese to convert the yuan into Hong Kong dollars. The new limit to halving personal transactions will double transaction fees. "We firmly believe that the mainland and Macau governments are not targeting the gaming industry," Goversen wrote. "Both governments want to support continued mass market recovery rather than implementing policies that could derail."

Meanwhile, Paulo Chan, head of game inspection and coordination, continues to be optimistic about next year. "Game revenue is expected to show stable progress in 2017 and will hopefully increase," Chan said. "Macao is starting to see healthy and sustainable growth."

According to Bloomberg News, the Macau government forecast next year's gambling revenue at 200 billion pataka $25 billion, which is the same as expected this year and 13% lower than the estimates of five analysts surveyed by Bloomberg. The city's gaming industry crawled out of its 26th consecutive month of revenue decline in August, and has been on a monthly rise since.

"Industry has learned the importance of healthy development," Chan said. "We will continue to prescribe in the present direction. It doesn't seem necessary for larger doses of medicine."


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