It seems there’s very little that can stop the boom of the Macau casino business.
In an interview with Bloomberg Television, Jim Chanos, the founder of the New York-based hedge fund Kynikos Associates, said he’s betting that Chinese bank stocks will tumble despite a rally spurred by government purchases. Interestingly enough, despite the fact that Chanos believes the financial situation of Chinese banks is “deteriorating,” he still believes that Macau casinos will continue to boom.
According to the Macau Daily Times, the gauge of banks, insurers and developers had tumbled as much as 43 percent in 2011 spurred on by growing concerns that slowing economic growth will spur bad debts in the wake of a three-year credit boom.
China’s banking regulator told lenders in July not to extend the maturity of loans to developers and not to grant new credit to help developers repay maturing debt.
According to Chanos, “The fact that people are even talking about the government stepping in to shore up the banks, when two months ago people thought there was nothing wrong with the Chinese banks, should tell you just how seriously this situation is deteriorating.” – Macau Daily Times
Additionally, gaming stocks were hit by a massive sell-off last week amid fears over tighter credit, higher interest rates and a slowdown in China’s economy that could hamper revenue. Despite this, Chanos has kept the faith and his holdings in casinos in Macau and was quick to cite their growth.
“The Macau casinos have a wonderful business, it’s taking in money from Chinese businessmen elsewhere who send it through junket companies to casinos to gamble…The growth continues and they have basically western managers and western accounting, so we trust the numbers a little bit more.”- Macau Daily Times.