(Bloomberg) -- Wynn Macau Ltd. and MGM China Holdings Ltd. climbed in early trading Monday, leading gains among the six Macau casino operators that were awarded new licenses to continue running their businesses in the gambling hub.
Wynn jumped as much as 14% and MGM rose 11%. A Bloomberg Intelligence gauge of the six operators rose was up 4.1% at 10:20 a.m. local time. Bucking the trend, Galaxy Entertainment Group Ltd., which was perceived as the least exposed to licensing risks, fell as much as 5.5% before paring the loss to 0.5%. Broader market sentiment was weak amid concerns about Covid measures and protests in China. The Hang Seng Index dropped 3.4%, the most in a month.
The casino operators won out over GMM Ltd., controlled by Malaysian casino tycoon and Genting Group Chairman Lim Kok Thay, for the 10-year licenses, which will take effect at the start of next year. Macau authorities said over the weekend that negotiations would continue with the winners on details for the final contracts, including how much they need to invest in non-gaming sectors.
The results remove concerns that one or more of the operators wouldn’t get a new license.
“One of the biggest overhangs of recent years is now removed,” JPMorgan Chase & Co. analyst DS Kim wrote in a note Sunday. “This could serve as a strong stock catalyst because many investors -- especially long-only -- were largely staying away from the sector given this ‘tail risk.’”
Still, China’s Covid Zero policy means casinos will continue to lack a steady flow of gamblers and tourists from the mainland, Macau’s biggest source of visitors.
The license bidding process, which lasted four months, followed changes to Macau’s gambling regulations to strengthen government control over casino operations and crack down on junkets soliciting high-rolling bettors from mainland China, where gambling remains illegal. The law was passed in June.
©2022 Bloomberg L.P.
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