Macau’s financial results took away Las Vegas’ position as the world’s number one gambling mecca. However, in recent news the region has been labeled as a risky place for wagering and most importantly, for investors.
The Wall Street world hasn’t been able to grab a hold of Macau’s financial results or future investments, thus making it difficult to predict which shares may lead the way. Macau, being under Beijing’s political control and depending on gamblers’ wagering behavior, offers in fact a riskier investing scenario than staking money on Burger King (BKW) or Wal-Mart shares (WMT).
Shares of Macau’s land-based casinos such as Las Vegas Sands and Wynn Resorts have a high variation percentage (almost a 50% variation during 2012). However, this cannot be attributed to shareholders or the company’s development but rather to players’ bets and even baccarat gamblers.
This puts Macau in a though spot since there is no clear financial perspective unlike the open markets of Las Vegas or Singapore.
Politics play a huge roll in a region’s financial outcome. The Beijing administration has recently stated that they are planning to crack down Macau’s junket operators. The decision came as a way to regulate the market and avoid intermediaries that promote VIP gambling venues and high-stakes.
Unfortunately, this news spooked many Chinese high-rollers and some investors as well.
What is amusing is that another issue that helped plump down the Macau casino shares was the gossip of a possible smoking ban that actually never took place.
Though all gambling venues offer high-risk investments, Macau also offers one of the most profitable share revenues for many companies. Investors can buy stock for as low as $2 per share and see their profits go all the way up to $32 or more in less than six months. However, a downturn is that Macau hasn’t yet successfully mixed its gambling venues with tourist attractions, as opposed to Las Vegas.
Unlike Macau, Las Vegas not only relies on gambling but also on its huge stack of hotels, resorts and amusement parks, which make it not only a gambling mecca but also a vacation paradise for almost any tourist.
Nevertheless, it is no secret that Macau’s financial boom has to do with its location, which happens to be the world’s most populated country and the biggest growing market. According to Forbes, China has the fastest-growing cohort of millionaires who fancy gambling. Therefore, Macau will continue to be a huge financial attraction for foreign investors despite the Beijing political sphere of influence.