Casino stocks tumble in HK

Macao casino operators hit by China fears
The sell-off appears to have been triggered by rumours that some junket operators were in trouble. These are companies responsible for drawing so-called VIP gamblers to Macao casinos by extending them generous credit and, sometimes, by being flexible about debt collection.
A junket operator in Macao who spoke on condition of anonymity said he was not aware of rivals experiencing a credit crunch. However, he had heard of mainland Chinese investors pulling capital from their investments because of monetary tightening at home.
“There are many wealthy factory owners from the east coast of China who have been making good returns from Macao simply by lending money to junket operators in return for 1-1.5 per cent in monthly interest. They have seen Macao as a profitable sideshow to their real business, which is experiencing a slowdown. However, some of them are in need of cash at home and have trouble borrowing from banks. So they are cashing out from Macao,” he said. So far, this only had a limited impact on the junket operators, he added, as they were still seeing strong growth in business.
Consider this story in light of my earlier post, Wenzhou factory owners run away from debt.

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