As recession threatens the world economies, financial analysts - who surely propelled investors into sure-fire sub prime lender stocks - are seeking safe haven sectors to hedge further stock market exposure. Oil futures could be a little darling if a crazed Bush administration with nothing to lose but its reputation for duplicity decides to support its energy friends, and fuels its Iran oratory by peppering the Persian Gulf landscape with aerial attacks.

However, and in the assumption that there are some cool Republican heads in Washington who merely seek to drift into political oblivion after a disastrous second term, analysts should look to opportunities in emerging markets and sectors that ride recession turbulence like seasoned surfers gliding confidently on breakers.

According to Citigroup analyst Anil Daswani, three Hong Kong-listed companies: Melco International Development, Galaxy Entertainment and Shun Tak Holdings, which shed an average 27% of their market value and got a real hammering in the fourth quarter, present good opportunities and the promise of insulation from the broader market turmoil. Traditionally investments in the gaming industry in the US and other jurisdictions have been recession resistant, and there is no reason for Macao not following suit.

Daswani said: “"Macau gaming stocks are currently trading at undemanding valuations in our view and could be a good place to hide if the US is hit by a recession.” Last week, shares in most Hong Kong-listed Macau companies closed on their lowest levels in a year. While valuations of Macau chips are by no means cheap, the across-the-board rout means shares in many companies have come down to levels not seen in more than a year.

HK SE Macau listed companies have continued to fall despite an announcement last week that gaming revenue surged 46.6% to 83 billion patacas (US $10.4 billion) last year. This year casino revenue trends have followed on last year’s progress with reported winnings of 5.5 billion patacas (US $687 million) during the first two weeks of January, which project another record-setting month. On this performance, reports of impeding recession in the West should prompt investors to look closely to gaming opportunities in the East. (E-01.28.08)

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