China Casino And Tech Stocks Fall Further as Crackdowns Bite Deeper

Asia’s markets struggled on Thursday with Hong Kong dragged down by further losses for its casino and tech firms as Beijing’s regulators continued their assault.

Hong Kong extended its streak to a fourth straight day, with Macau’s casinos back in the spotlight after Wednesday’s crash fuelled by city authorities’ plans to tighten its control of the industry.

Trillions of dollars were wiped off the valuations of six listed firms in reaction to the proposals, which include putting a government representative on their boards.

Also on AF: The Hit List: How China’s Crackdowns Have Cost Its Firms Billions

The announcement fanned concern that the days of multi-billion-dollar revenues are gone in Macau, which before the pandemic raked in more in a week than Las Vegas did in a month.

US-owned Wynn Macau and Sands China were among the worst-hit, and their heavy losses extended into Thursday. The firms’ US stocks also took a hammering on Wall Street. Melco, MGM, Galaxy Entertainment and SJM fared a little less badly.

Macau’s proposed clampdown comes as officials in mainland China tighten their grip on a range of private enterprises in a drive to reform the business and cultural landscape and achieve President Xi Jinping’s goal of “common prosperity.”

A strong performance on Wall Street was not enough to spur any enthusiasm across the region, with concerns about the spreading Delta Covid variant and its impact on the economic rebound draining confidence.

EVERGRANDE CRISIS

Traders are also keeping tabs on developments in China, where one of its biggest property developers, Evergrande, is drowning in a sea of debt that could see it crash into a bankruptcy that observers fear could have a severe impact on the world’s number-two economy and beyond.

Tech firms, which have been high on officials’ list of targets, also extended a long-running sell-off in Hong Kong with market heavyweights Alibaba and Tencent again in the red.

“The regulatory crackdown… threatens to slow the domestic growth momentum with many China commentators seeing a pivot away from maximising growth, to social order and stability,” National Australia Bank’s Tapas Strickland said.

The Hang Seng Index dropped 1.46%, or 365.36 points, to 24,667.85. But the Shanghai Composite Index shed 1.34%, or 49.13 points, to 3,607.09, while the Shenzhen Composite Index on China’s second exchange fell 1.95%, or 48.57 points, to 2,437.56.

Elsewhere in Asia, Shanghai, Tokyo, Seoul, Wellington, Jakarta and Taipei also fell, though Sydney, Singapore, Mumbai, Manila and Jakarta edged higher.

The benchmark Nikkei 225 index fell 0.62%, or 188.37 points, to 30,323.34, while the broader Topix index lost 0.30%, or 6.23 points, to 2,090.16.

OPTIMISM REMAINS

While markets are struggling to build on their more than year-long rally from the wreckage of last year, analysts remain largely optimistic that the global economy will continue to recover as it slowly emerges from the pandemic.

“Global economic growth remains above trend, albeit past peak levels, supported by central bank liquidity, progress on vaccine distribution, and continued reopening momentum despite the spread of the Delta variant,” investment management firm T Rowe Price said in a report.

But it did warn that the “deceleration” phase of the market cycle had begun, as seen in an easing of economic and earnings growth.

Oil prices held steady after Wednesday’s big gains that came on the back of data showing US stockpiles reduced last week after huge storms hammered production in the Gulf of Mexico.

MARKETS

Tokyo – Nikkei 225: DOWN 0.6% at 30,323.34 (close)

Hong Kong – Hang Seng Index: DOWN 1.5% at 24,667.85 (close)

Shanghai – Composite: DOWN 1.3% at 3,607.09 (close)

New York – Dow: UP 0.7% at 34,814.39 (close)