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Macau Stocks Rise After New Licenses Granted
Recently, the Chinese government has been cracking down on gaming which is why prominent Macau casino operators were worried about their licenses. But once the government decided to give out new ones and granted them, things started to calm down.
The new casino licenses were granted to a couple of operators and certain ones didn’t make it on the list. As soon as they got their licenses, the stocks of these operators rose. But the coronavirus is still an issue that China needs to deal with which is why certain restrictions are still in play.
New Licenses Increase Value
Only those that fulfilled certain conditions got a casino license from the Chinese government. They can be considered the lucky ones as certain brand names weren’t granted a license. A certain entity tied to Malaysia’s Lim Kok wasn’t granted a license.
On the other side, you have those that have got a new license today. These include the likes of Melco International, Galaxy Entertainment Group, SLM Holdings as well as Wynn, Sands, and MGM. The latter saw an increase in stock value once the new licenses were granted. Sands China rose by 8.4%, MGM China Holdings rose in value by 13% and Wynn Macau is leading the tide with 15.1%.
This is good news for investors and operators as they have gotten into heavy debt to continue their operations in these troubling times. In the past years, government restrictions have cut their operations in half and once Xi Jinping was elected president again, he introduced new stricter measures.
This is why the Macau incident occurred. There was a dealer that tested positive for the coronavirus and the entire casino and hotel went under lockdown. Both staff and visitors had to stay inside for a couple of days before the situation settled. Once it did, the lockdown was lifted.
Macau’s economy relies heavily on the operation of casino establishments which is why these restriction cause trouble on the one hand. On the other hand, the number of people affected by the coronavirus has been rising which is why China has introduced new measures. These measures are there to curb the rising tide of new cases.
This is why the government added another condition to the operators that were granted a license. They need to diversify their operations and include non-gaming projects. With the rise in value, they are able to rethink the situation and find a solution to the condition.
With this move, China is hoping to give the Macau region a more stable economy that doesn’t rely on casino operations only. Time will tell how this will work in the future and how it will change the region.
Conclusion
With the new licenses, the government is looking to battle the rising tide of coronavirus cases and keep the economy from falling apart. The Macau region has a difficult period ahead of itself which is why certain casino operations will need to be changed. Time will tell if this tactic works or if a new one needs to be adopted.
