Macau ATM Move Weighs Heavily on Casino Stocks

Casino stocks have taken a battering this week, after the Monetary Authority of Macau announced that starting Saturday daily withdrawals from China UnionPay bank cash machines would be halved to just 5,000 patacas ($626). This will have a major impact on the island’s gambling sector as around 50% of all Chinese visitors to Macau use UnionPay ATM.
Casino stocks subsequently were severley impacted by the development, with Sands China down 10.13%, Galaxy Entertainment Group down 9.69%, Wynn Macau down 9.93%, and SJM Holdings down 5.59%.
Spurring the regulatory institution to take such drastic measures was the fact that around 10 billion patacas ($1.25 billion) was withdrawn from China UnionPay ATM machines in just one month in the country’s only legal gambling resort. The situation has been compounded by the actions of illicit money movers as they try to circumvent the 100,000 yuan (HK$112,600) annual cap on UnionPay cardholders imposed at the beginning of 2016, and as a source told the South China Morning Post:
“What has happened is that individuals are turning up at ATM machines with stacks of cards from individual account holders and are withdrawing 10,000 [patacas] at a time. The authorities have decided it is time to act, and Beijing is backing the move.”
China sees tighter capital controls as essential in combatting a depreciation of its national currency, with the yuan’s falling value subsequently leading to an outflow of money out of the country and a depletion of its foreign exchange reserves. In fact, capital outlfow reached $80 billion in November, up from $75 billion in the previous month, and China’s gross reserves have now fallen to $3.05 trillion, down from their 2014 peak of $4 trillion. Meanwhile, net reserves are down to just $1.7 trillion, according to the latest information released by hedge fund Kynikos Associates.
While China has introduced a number of capital controls in the past, this is the first time that they have been used to directly target Macau.