Macau casinos surge on reports gov’t may soften smoking stance

Casino operators’ stocks surged in Hong Kong, with Wynn Macau Ltd. heading for a two-month high, following reports the government may ease plans to ban smoking rooms on gaming floors.
Wynn Macau jumped 5.7 per cent yesterday, as Galaxy Entertainment Group Ltd. and Sands China Ltd. rallied at least 4.7 per cent. The government may let casinos retain smoking rooms if they can prove the health of employees and patrons is protected, Macau Business said, citing Secretary of Social Affairs and Culture Alexis Tam Chon Weng.
Galaxy and Sands have been the worst performers on the Hang Seng Index in the past 12 months as China’s corruption crackdown sends high-rollers elsewhere and the proposed universal smoking ban looms as another drag on gaming revenues. The government’s proposed plan would ban lighting up in VIP rooms, whilst eliminating the airport-style smoking lounges that are currently permitted on mass gaming floors.
“It’s a squeeze, a bear-market squeeze, so anything can trigger it,” said Benjamin Collett, Hong Kong-based head of Asian equities at Sunrise Brokers LLP. The smoking-room report “indicates a softening of the government’s stance, and that’s positive enough to make you reduce your short position.”
Gross gaming revenue in the MSAR fell 36 per cent in June from a year earlier to its lowest level in more than four years. High-stakes gamblers would reduce their trips to Macau by 17 per cent and reduce their length of stay once the smoking ban is implemented, Deutsche Bank AG said in a June 29 report, citing a third-party report commissioned by the city’s six casino operators.