Is the new leadership in Beijing going to crack down on the billions in illicit funds long believed to be bank-rolling Macau?s spectacular rise as the Las Vegas of the East?
That?s the question investors were asking as they sold down Macau gaming shares on Tuesday, following new reports that a handful of junket operators had been arrested for suspected money laundering.
Pang Yufeng and Qin Xi Xin, two individuals who bring high-rollers from the mainland to the VIP rooms in Macau casinos and then collect the gambling debt in return for a commission, were arrested in recent weeks, according to the Wall Street Journal. Reuters also reported that more than half a dozen of these agents were arrested at Wynn Macau?s properties last month, possibly in relation to money laundered by Bo Xilai, the disgraced former Chongqing chief.
Hoffman Ma, deputy chief executive officer of Ponte 16, a Macau casino, said he didn?t believe that any recent arrests would have to do with Xi Jinping being at the helm in Beijing. He said the VIP sector started to slow down half a year ago, which was a sign that a general crackdown against illegal fund flows had begun in Macau.
?It?s good for the reputation of the industry as a whole. Before, Macau was too reliant on the VIP sector ? a relatively small pool of high-rollers involved in massive transactions. It?s better to have an industry supported by more mass-market players,? he said. ?I don?t think Beijing wants to see an end to funds going from mainland China to Macau. Officials just don?t want people to get away with taking too much out by using underground channels,? he added.
Shares in Macau?s biggest players ? Sands China, Wynn Macau, SJM and Galaxy Entertainment ? all dropped around 5 per cent on Tuesday. Macau gaming revenue rose 7.9 per cent in November from a year ago, much slower than the exponential growth the city saw up to 2011. Mass-market revenue was still up around 30 per cent.
Related reading:
?Broken Tooth? released from Macau jail, FT
Manila to probe casino bribery allegations, FT
Source: http://blogs.ft.com/beyond-brics/2012/12/04/macau-crackdown-hits-casino-shares/
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