The People’s Bank of China (PBOC), that country’s central bank, said Wednesday it’s increasing the daily limit on money transfers from Macau to the mainland. It’s a move that could eventually prove beneficial to the peninsula’s six gaming concessionaires.
PBOC said the new cap on cash transfers from Macau to Mainland China is 80,000 yuan ($11,400), up from 50,000 yuan ($7,140).
The measure will be implemented in the near future and will make trade between the two markets more convenient,” reports Reuters, citing PBOC.
The central bank’s move was announced as President Xi Jinping visited the Special Administrative Region (SAR) to take part in festivities commemorating the 20th anniversary of the handover of Macau to China from Portugal.
Move Makes Sense
PBOC’s plan to lift the ceiling on Macau-to-mainland money transfers is a practical step for a number of reasons. First, gamblers from Mainland China represent the gaming territory’s key constituency. Through the first eight months of 2019, 19.53 million of the more than 27 million visitors to Macau were from the mainland. That’s more than triple the second-largest driver of Macau visits, which was Hong Kong.
Beijing is also looking to transform Macau into a financial center in an effort to diversify the gaming-dependent economy there. News of that effort comes as Hong Kong, another SAR, has drawn the ire of Chinese leaders because of pro-democracy demonstrations that have been ongoing since June.
Beijing’s plan to transform the gaming Mecca into a financial hub are viewed as a warning to Hong Kong. But there’s credibility to the effort.
China’s massive state-controlled financial institutions have already set up infrastructure in Macau and there are rumors an equity bourse will launch there at some point in the future. If the SAR does create a stock exchange, the increased money transfer limit would become all the more important because it’s likely many of the participants in a Macau stock market would be based on the mainland.
PBOC did not explicitly mention integrated resort operators in its statement on the increased cash movement limit. But investors embraced the news: on Wednesday, shares of Las Vegas Sands (NYSE:LVS) climbed 1.11% while Wynn Resorts surged almost 4%.
Melco Resorts (NASDAQ:MLCO) added 3.79% on the news and was helped by an analyst upgrade.
The casino stock was also singled out today by Nomura Institute as one of its top picks for 2020,” according to Seeking Alpha. “Nomura sets a price target of $33 on Buy-rated MLCO based off a sum-of-the-parts evaluation.”
LVS, Melco and Wynn are three of the largest operators in Macau. Shares of Melco are up 13.31% over the past week.