Macau Casinos Rise After Fears of China Cash Card Crackdown Ease

Macau casino companies rose in Hong Kong after analysts said worries over a crackdown on illegal money transfers may be overblown and won’t affect gambling demand.

Sands China Ltd. advanced 4.3 percent to HK$54.8, Wynn Macau Ltd. rose 3.2 percent and MGM China Holdings Ltd. gained 2.7 percent as of 9:34 a.m. local time. The Hong Kong benchmark Hang Seng Index fell 0.4 percent.

Macau police said yesterday they have seized China UnionPay Co. mobile card-payment devices that were being used illegally in the enclave. Investment bank Union Gaming Group said this week Macau may tighten visa rules for visitors from mainland China. Casino shares plummeted yesterday on concerns that gambling demand will be affected.

“The reported clampdown on UnionPay card usage will have no real impact on gaming demand as the clampdown is targeted at illegal use of mobile payment terminals and it has nothing to do with legally-installed UnionPay systems at watch stores, pawnshops etc,” D.S. Kim, a Hong Kong-based analyst at BNP Paribas wrote in a note today.

Galaxy Entertainment Group Ltd. rose 3.3 percent to HK$57.2, SJM Holdings Ltd. and Melco Crown Entertainment Ltd. climbed more than 2 percent.

Concerns regarding recent news are likely misinterpreted and he expects opportunities for longer-term investors, Wells Fargo analyst Cameron McKnight wrote in a note.

Visa Restrictions

Macau may tighten visa rules for visitors from China, investment bank Union Gaming Group said in a May 5 report. Police in the former Portuguese colony said they had made 12 arrests involving pay card fraud cases in February and March this year, according to an e-mailed statement yesterday.

Police said they made six arrests on Feb. 18 when six UnionPay card terminals, account books and HK$700,000 of cash were seized. On March 6, four people were detained as officers found three China UnionPay card terminals, purchase receipts and HK$920,000.

Eight days later, two people were arrested as police found four payment terminal devices, 304 bank cards, authentication machines, card consumption receipts, China travel permits and more than HK$3.4 million ($438,000) in cash, police said.

China is cracking down on the use of hand-held card-swipers within casino resorts amid concerns that tens of billions of yuan in illicit funds are being taken out of the mainland and into Macau, the South China Morning Post reported yesterday, citing people in the gaming and security business it didn’t identify.

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