Shares in Macau gambling stocks slid yesterday as investors feared Chinese restrictions on travel may dent the SAR's three-year casino boom, boding ill also for global operators such as Las Vegas Sands, according to Reuters. Latest restriction on visas for Chinese travelers, which limited visits by residents of the country's south, is smothering Macau's major source of revenue and may mean even stricter curbs are in the offing. As reported in the last days gaming revenues fell 3.4 percent to 6.9 billion patacas in September from a year ago, the first annual drop since January 2006, while analysts reckoned they declined 3 percent. The Macau government declined comment. Shares in casino operator Galaxy slid 11 percent, while Shun Tak, which operates a ferry between Hong Kong and Macau, slid 13 percent, far worse than the market's 4 percent loss. "There are concerns that more visa restrictions that are more severe than the previous ones will be implemented," said Gabriel Chan, an analyst at Credit Suisse. "The restrictions are damaging the sector. According to estimates, gaming revenue is down 3 to 5 percent in September." Falling stock markets, slowing economic growth and worries about financing are hounding the worldwide gaming sector. But investors also fear a weakening in Macau after years of unprecedented growth, because of travel restrictions meant to curb money laundering and illegal activity. In April, Macau halted the issue of new casino licences and imposed a land freeze on the building of new casinos, in what analysts interpreted as a bid by Beijing to rein in its excesses amid growing social tensions and perceptions of endemic graft. Now, fierce competition, a casino glut, and wafer-thin margins eaten away by powerful VIP gambling operators are all taking a toll on casino earnings, analysts say. The latest restriction, which took effect on October 1, limits Guangdong residents to one Macau visit every three months, instead of every two months previously. Residents of the affluent province account for a large number of visitors in Macau. The world's biggest gaming companies have major footprints in Macau. A slowdown will hit hard at a time they are struggling with a slowing Vegas market in a slowing world economy context. Macau has not released casino data for the third quarter. On August 20, shares in all three fell by 6.5 to 11 percent in New York after a report by Lusa that China may slap tighter restrictions on travel visas. The Chinese government, in an effort to cool Macau's growth, has gradually tightened regulations for citizens entering the city, which is putting a strain on its infrastructure. The restrictions are part of Beijing's efforts to curb illegal activity, said Davis Fong, a director at the University of Macau for its Institute for the Study of Commercial Gaming. "The Macau government and the Chinese government have been striving to put the gaming industry in a healthier growth path," he said. Visa restrictions may stay until the first half of 2009, said Gary Pinge, a gaming analyst at Macquarie Research. Until they are lifted, the gaming sector may remain sluggish, he said. For the whole of 2008, Macau's gambling revenue may grow about 32 percent, said Credit Suisse's Chan. That's less than the nearly 50 percent rise in 2007. In the first eight months of 2008, gambling revenues rose by more than 40 percent, he added. Longer term, some analysts warned that scarcity of credit may stall several high-profile expansion projects in Macau. "Because of the financial crisis, companies may face financing gap problems, " Chan said. "And even if these companies are able to complete these projects, there are concerns about whether there will also be demand for them."
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