Has Macau Crapped Out? (Bloomberg)
Shares of the six largest casinos in Macau are down 20 percent so far in 2014. This dip follows a two-year roll of good luck, during which those same casinos averaged 217 percent gains for investors. Worse, the losses this year are three-times larger than those of the broader Hang Seng Index in Hong Kong – erasing some $35 billion in market value. Why the fall? On the fundamental side, valuations were getting out of hand, chasing away institutional investors. And on the human side, investors have become jittery about a Chinese crackdown on graft. All of the major Chinese affiliates of global gaming companies, such as MGM Grand (MGM), Las Vegas Sands (LVSC), Wynn Resorts (WYNN), and Melco Crown Entertainment (MPEL) were down on the news. Is this the beginning of a bad run on gaming companies, or merely a dip and a chance to buy? Are you ready to roll the dice and see?