There are mixed messages coming out of Macau these days. In the first two weeks of 2008 record gaming revenue of US$680 million was reported and yet it is thought that the global credit crunch will impact gaming industry growth. Funds for further expansion may get harder to come by, although Las Vegas Sands has just secured US$1.4 billion in Singapore dollars at the favourable Singapore interest rate to continue its Marina Bay Sands development.

Melco PBL shares continue to lose ground – down almost 50% in the last three months. Factors involved include uncertainty over future earnings as more casino hotels open in Macau and a shortfall in funding. Last May Crown Macau opened a reduced operation that was not fully functioning until August. Its City of Dreams project should open in March 2009 but costs are already above budget. Land purchase for a third development, Trinity, has been delayed.

The original gaming giant in Macau, Stanley Ho’s Sociedade de Jogos de Macau (SJM) postponed its Hong Kong listing this week. Tuesday’s launch was cancelled after the financial regulator apparently sought additional information, but there were also suggestions that potential backers considered the IPO too expensive. SJM is seeking to finance new expansion in the competitive climate that now exists in Macau.

Last year the Macau economy grew 30%. Tourist numbers are rising rapidly, particularly from mainland China, but the Macau infrastructure is increasingly under strain. Local residents are becoming more likely to voice their protest over rocketing land and accommodation prices, the influx of illegal labour and the casinos pricing other employers out of the market for staff.

Things at present are far from critical but clouds seem to be gathering on the horizon. The state of the world economy could play a crucial part in the plans of the Macau gaming moguls; greater competition will make the incredible return on investment, experienced when Sands Macao opened in 2004, a thing of the past. 2008 may prove to be an interesting year for those gambling on Macau. (E-01.18.08)

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