Asia’s largest gaming expo opens in Macau

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MACAU – Casino industry leaders gathered in the world’s gambling capital of Macau on Tuesday for the Global Gaming Expo Asia, a three-day feast of gambling innovations at the glitzy Venetian hotel.

No expense or kitschy extravagance has been spared for the largest gaming event in Asia, showcasing the industry’s latest products, services and technologies.

The casino business has boomed in Asia, and especially in the former Portuguese colony of Macau, over the past 10 years but this year’s expo is taking place amid fears of a glut of gaming tables across the region.

Gaming revenue growth in Macau has fallen from the stunning highs of the past two years, and the city’s casino operators have watched their companies’ shares tumble on the Hong Kong stock exchange since the end of April.

Standard & Poor’s ratings agency last week warned of “medium-term risks” for Asia-Pacific gaming companies, notably those in Macau and Singapore, from billions of dollars in new casino supply proposed over the next five years.

It asked whether the Chinese gambling market could fill the huge integrated resorts — all-in-one playgrounds of casinos, hotels and luxury retail space — that are earmarked for construction from Macau to Manila Bay.

Earnings growth would moderate over the next 12 months, while remaining “robust”, the agency said.

“Given this backdrop, and despite continuing global economic uncertainty, all rated casino operators operating in the region have a stable or positive outlook,” it said.

US gaming mogul Steve Wynn announced this month he had received the go-ahead to build a new casino in Macau, adding to the 265,000 square feet (24,619 square meters) of gaming space his local unit Wynn Macau already owns.

In late April, Macau’s Galaxy Entertainment Group announced its intention to build the HK$16 billion ($2.1 billion) second phase of its Galaxy Macau integrated resort, ramping up competition in the city.

Economic growth in China eased to 8.1 percent in the first quarter from 9.7 percent a year earlier, hit by falling domestic demand and Europe’s debt woes.

But Hong Kong-based analyst Aaron Fischer, head of gaming research at CLSA brokerage, believes the new casinos planned for Asia will drive demand to new heights.

“Referencing to Las Vegas shows that the gaming industry is a supply-driven industry in which new casino opening is needed to drive increased critical mass into the casinos,” he wrote in a report released last week.

There are five integrated resorts on Macau’s glittering Cotai Strip — which has boomed since the city liberalized its gaming industry in 2002 — and that number should more than double over the next decade, he said.

“Given the market size and growth and the long window before the next opening we believe Macau could absorb multiple openings within a narrow time frame,” Fischer said.

“Despite slowing growth, we believe Macau gaming stocks will rise 65 percent in the next 12 months and this is attractive compared to the average upside for (the) Asian consumer sector of 16 percent.”

Analysts said gaming stocks listed in Hong Kong had been hit by profit-taking and a more general sell-off in perceived higher-risk assets over the past two months.

Shares in Galaxy Entertainment, Wynn Macau and Sands China have each fallen about 20 percent since the end of April, in a broadly weaker market.

Six firms are licensed to operate casinos in Macau, which was handed back to Beijing in 1999 and enjoys freedoms not allowed on the mainland. It is the only place in China where casinos are legal.