Macau Casinos Lead Declines in Hong Kong Amid Revenue Concerns

Jan 12, 2017 4:35 am ET

(Bloomberg) -- Casino stocks dragged Hong Kong’s benchmark equity index lower by the most in three weeks, as investors weighed whether Macau gaming revenue forecasts may be too optimistic. Lenovo Group Ltd. headed toward a two-month high.

The Hang Seng Index fell 0.8 percent to 22,764.07 as of 2:32 p.m. local time, with Sands China Ltd. and Galaxy Entertainment Group Ltd. dropping the most on the measure. CIMB Securities Ltd. lowered its ratings on a number of gambling companies, saying that consensus estimates for 2017 Macau gaming revenue are too aggressive because policy uncertainties remain. The Shanghai Composite Index lost 0.5 percent.

The Hang Seng Index’s decline ends a five-day winning run that was the longest since July last year. The city’s shares have been sought out by mainland investors looking for non-yuan assets through a stock link amid a decline in the Chinese currency. This helped drive the price premium of dual-listed mainland shares over their Hong Kong counterparts to the least since October on Wednesday. The onshore yuan declined 3.9 percent in the last three months.

Lenovo Group surged on Thursday after researcher IDC said the company retained its position as the world’s top personal computer seller. The stock climbed 2 percent to lead gains on the Hang Seng Index.

  • Sands China fell 3.1% and Galaxy Entertainment tumbled 2.6%, while SJM Holdings Ltd. dropped 3.2%. Gaming shares had climbed earlier this week after surveys by Citigroup Inc. and JPMorgan Chase & Co. showed growth in gross gambling revenue recovered in January.
  • The Shenzhen Composite Index fell 0.7% to head toward a five-month low, while the Hang Seng China Enterprises Index retreated 0.4%
  • China Vanke Co. suspended trading in Hong Kong and in Shenzhen, saying its shareholder China Resources Co. is making “major” plans regarding its stake. China Resources will sell its shares in Vanke to Shenzhen Metro Group, reported, citing two people it didn’t identify.
  • China Overseas Land & Investment Ltd., which tumbled last quarter, rose 0.7% to head for a weekly gain of more than 6%.

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