Published on: September 24, 2024, 04:06h.
Last updated on: September 24, 2024, 04:06h.
Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) were among the top-performing casino stocks today following the announcement of monetary easing measures by the People’s Bank of China (PBOC). These measures increased the shares of Macau gaming equities.
The PBOC reduced its reserve requirement ratio (RRR) by 0.50%, hinting at a further 25 basis points cut in the future. The seven-day reverse repo rate was also lowered by 0.20% to 1.50%. The news of PBOC’s easing measures provided relief to Macau casino stocks and led to increased trading volume on Chinese equity exchanges. Turnover in mainland China was 124% higher than the one-year average, while volume in Hong Kong, where Macau gaming equities are traded, was 236% above the one-year average.
KraneShares, a New York-based issuer of exchange traded funds, likened the scenario to a “policy bazooka.” The PBOC’s actions in loosening the mortgage market could have a significant impact on Macau concessionaires. By cutting existing mortgage rates by half a percent, it is expected to benefit millions of Chinese households and individuals, potentially boosting discretionary spending and benefiting Macau’s gaming industry. The PBOC’s moves came shortly after the Federal Reserve’s rate cut of 50 basis points.
The monetary easing by the PBOC signals its commitment to support the Chinese economy and Macau casino stocks responded positively, with Las Vegas Sands gaining 5.34% and Wynn Resorts rising by 4.93%. Melco Resorts & Entertainment (NASDAQ: MLCO) also saw a 9% increase in value. These companies, through their Sands China and Wynn Macau units, operate several integrated resorts in Macau, highlighting the importance of China to their revenue streams.
International and local investors may now be compelled to scrutinize Macau casino stocks and the broader Chinese equity market due to the relaxed monetary policy. This could prompt a reevaluation of investment strategies and allocations in light of the changing economic landscape.
“The move comes against a backdrop of very low China equity ownership. The move, just prior to quarter end, will put pressure on managers to allocate. I’ve been shocked at how low China allocations remain amongst US institutional investors,” noted Brendan Ahern of KraneShares.
Some experts believe that additional stimulus may be necessary to further support Macau casino stocks, which have been struggling in recent years.
Despite the positive developments, there are concerns that more action may be required from the PBOC to address the deepening economic challenges facing China. Experts emphasize the need for a comprehensive strategy to navigate the uncertain economic environment.