MGM China Holdings Ltd. fell the most in seven months, leading declines among Macau casinos after JPMorgan Chase & Co. cut its rating to neutral and recommended investors trim holdings of rival operators.
The operator controlled by MGM Resorts International declined 6.6 percent, the most since June 11, to HK$32.65 at the close in Hong Kong trading. Galaxy Entertainment Group Ltd. fell 5.5 percent to HK$76.95. Sands China Ltd. and SJM Holdings Ltd. dropped 4.1 percent and 2.7 percent, respectively.
“We believe the sector is at risk of entering a period where there is more room for downside rather than upside surprise,” Kenneth Fong, a Hong Kong-based analyst at JP Morgan, wrote in a research note published today.
The market has already priced in a “significant growth” assumption from the future projects while insufficient labor and gaming-table allocations may add risks, he said. The bank expects the industry’s revenue growth to slow to 17 percent this year, according to the note.
Casino revenue in Macau, the only place in China where casino gambling is legal, rose 19 percent to $45.2 billion last year, about seven times that of the Las Vegas Strip.