Why the Casino Stocks Plunged Suddenly

Why the Casino Stocks Plunged Suddenly

The Gaming stocks plunged suddenly yesterday after China limited the maximum amount of money that Macau visitors can take out of an ATM. Approximately around 2:00 EST, this news hit the market, so the shares of Wynn Resorts fell nearly 11%, Las Vegas Sands dropped almost 12%, and Melco Crown dropped with 13% at the end of trading. MGM Resorts International was spared this pain because it remains Las Vegas focused. However, its shares are down 5.3%.

What does that mean?

The South China Morning Post reported that the country is cutting the maximum amount of cash customers can pull out of their Union Pay cards to $626 per day. This happened after they instituted the annual cap of $13,697 several months ago. The impact of the Union Pay limit will most likely have a massive effect on companies like Melco Crown and Las Vegas Sands. However, it will not likely have a big impact on Macau.

What will happen next?

We will be quite surprised if an ATM limit becomes something that has a massive impact on the $27.8b Macau market. So, if this is a sign that there will be a further crackdown on the capital heading to Macau, there might be huge negative side effects. However, that is highly unlikely.

Macau begins to recover slightly, but there is a concern that the industry might be heading into decline once more. However, we do not think that this speculation will stick around unless China’s currency manipulation exceeds ATM limits.