The extensive corruption checks in Beijing are affecting the markets in Hong Kong and Macau. The crackdown is having a visible effect on the favourite pastimes of the rich and the famous of China – shopping at high-end malls in Hong Kong and gambling at casinos in Macau.
With the high-rollers from China taking a back-seat, the earnings from casinos have seen a fall for the second consecutive time in July. The gambling capital saw a decline of nearly 4 percent in its earnings as the high-rollers chose to stay away from the tables. The sale of luxury items like jewellery and watches received a much stronger blow though, with a drop of almost 30 percent in June. This is for the fifth time in the year that the sector has seen such a downward trend.
Gone with the VIPs
2010 was a booming period for both the casino and the luxury items sectors, when Macau became a haven for rich VIPs from the Chinese mainland. The middlemen of Macau left no stone unturned in introducing the Chinese elite to the gambling retreat. Last year, the region earned a total of $45 billion in gambling, which is seven times the revenue generated by the Las Vegas Strip! The high-rollers contributed to at least two-third of this amount.
Industry insiders and analysts only have one thing to blame for it – the stern actions being taken by the Chinese government to keep corruption in check. As the high rollers suspect having a close eye on them, they clearly are not excited about flaunting luxury watches or even going home with a big win at a poker table.
Market to stay weak
Grant Govertsen, analyst at Union Gaming Research, revealed that the widespread corruption check undertaken by the government has actually taken the elite community by shock, as it did not expect such widened measures. The VIPs are likely to keep a low profile for some more time, which will reflect in the form of decline in the gambling revenues and sale of luxury items.