Macau's Money Propaganda Move Could Offend Investors

Macau criminalizes unauthorized money exchange inside casino facilities for gambling purposes "could cause some noise and lead to a weaker short-term stock price" among Macau casino operators, Citigroup noted.

The money change ban has been added to the latest draft of the Gambling Crime Prevention Act. It also covers unlicensed changes to money in the non-gaming area of casino assets.

Those convicted face up to five years in prison.

Citigroup analysts George Choi and Ryan Cheung said: "I think the news that the Macau government has decided to criminalize [unauthorized] currency exchange activities could cause some noise and lead to a weaker short-term stock price."

The agency also noted: "Most players have legitimate ways to transfer funds to Macau, and while this microfinance propaganda is unlikely to be a major financier for premium public players, we are concerned that such negative news could add to the uncertainty and hurt investor sentiment in the already fragile Macau gaming sector."

Nevertheless, Citigroup added that it "continues to demonstrate that Macau is still one of the best outbound destinations for mainland Chinese" in response to the latest visitor trends in the Macau tourism market

Data from Macau's government tourism agency released on Thursday showed the daily average of visitors to Macau in the first seven days of August was about 22% higher than the daily average in July. The most recent daily average was 120,000 people, compared with 98,000 during July.

In its own memo released on Monday, JP Morgan Securities (Asia-Pacific) recalled that "criminalization" of unauthorized exchange within casino facilities in Macau had been "discussed for almost a year."

"There has already been a very severe crackdown on illegal currency exchange for two to three months on the ground," wrote analyst Kim, Mupan Si and Selina Lee.

"Based on our checks, finding these currency exchange providers in and out of casinos is no longer easy, and I don't think we expect a significant number of market participants (if any) to come back in the near future anyway," they added.

"In other words, I don't think this headline changes the paper in a meaningful way," the JP Morgan team said

Veteran lawmaker Chan Chak Mo, who leads a legislative congressional committee scrutinizing the bill, said on Friday that Article 11 of the Gambling Crime Combat Act was leading "operating illegal currency exchanges for gambling."

According to Mr. Chan, 동행복권파워볼 the new article states that "any person who is not authorized to run a currency exchange business for gambling purposes could face up to five years in prison."