Could Macau currency declaration plan eat into mass market gaming?

TAGs: ambrose so, financial action task force, Macau, mass market, SJM Holdings

macau-currency-declarationSJM Holdings chairman Ambrose So teased the media last week as to the “quite good” contents of his company’s upcoming H1 report card, saying only that it was “double-digit growth, more than 10%” above the market-leading SJM’s profit of MOP 3.4b (US $327.1m) in H1 2012. Macau gaming regulators recently revealed the enclave as a whole had enjoyed 15.3% gaming revenue growth year-on-year, despite persistent rumors of an economic slowdown on the Chinese mainland, threats by mainland authorities to clamp down on junket operators, or even horror stories about a new avian flu outbreak.

SJM’s So didn’t quite declare Macau’s casino business impervious to external factors, but he came close in a conversation with reporters on Friday. So said talk of an economic slowdown on the Chinese mainland had been going on for some time now, “but I have not seen any impact on gaming revenue … There is some talk about loan problems and a credit crunch, but these will only have temporary effects … We are positive on the prospects.”

Not so bullish on Macau’s prospects is Barclays Bank, which is worried about a proposal to require Macau visitors to declare how much cash they’re carrying when they cross the border. News of the plan came last week via Deborah Ng, director of Macau’s Financial Intelligence office, who told the Lusa news agency that the government was “analyzing the feasibility of implementing a declaration or notification requirement” to satisfy the demands of the international Financial Action Task Force on Money Laundering. Ng subsequently told Bloomberg that Macau was studying a “cross-border cash declaration system, but no timeframe, declaration threshold or penalties are determined yet at the present stage.”

China already limits the amount of money its citizens can take out of the country to RMB 20k ($3,260) per trip, while allowing them to withdraw a further RMB 10k per day per ATM card while they’re abroad. Macau currently imposes no limits on the amount of cash coming into the city, but Barclays warned that the proposed change would result in “some negative impact” to mass-market gaming revenue. A contrary position was taken by UOB Kay Hian Ltd. analyst Victor Yip, who said news of the proposal might temporarily affect Macau casino stocks but casino revenue would be spared “because there are so many different ways a traveler can get cash in Macau.”


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