Published on 17/10/2016 – www.stockmarketdaily.co – Follow us on twitter: @SMDailyco
Casino stocks opened for trading on Monday under pressure after authorities in China detained more than a dozen employees of Crown resorts, an Australian-based casino operator that doesn’t operate in China.
According to CNBC, 18 employees, including an executive vice president, were detained in China. The employees were said to be from the company’s sales and marketing department and responsible for attracting large gamblers, known as “whales,” to casinos in Australia under Crown’s operations.
Crown told CNBC in a statement that it has “not been able to speak with employees” and has also “not been given details on why its workers had been detained.”
It is also unclear if the individuals were detained in mainland China or Macau.
The Chinese Ministry of Foreign Affairs told CNBC in a statement that the individuals face “criminal detention for their suspected involvement in gambling crimes.”
Sales teams from outside of China routinely pitch their casinos to Chinese gamblers and it is not clear if the detainment was related to a specific activity conducted by Crown.
Crown’s Australian listed stock (ASX: CWN) plunged nearly 14 percent during the Australian trading session. North American investors shared a similar negative sentiment and immediately sold US-listed casino operators although the decline was short lived.
For example, shares of Las Vegas Sands opened for trading at $56.55 on Monday and hit an intra-day low of $56.40 before recovering all loses and briefly trading in positive territory.
Las Vegas Sands legally operates gaming properties in Macau and holds a long-lasting relationship with the Chinese government. Initial selling in the stock could be seen as an over-reaction.
Jonathan Galaviz, a chief strategist at Global Market Advisors, told CNBC that foreign casino operators with no legal status “need to be cautious” in how they market their casinos and products in China.
Similarly, Wynn Resorts (NASDAQ: WYNN) saw its stock sell-off to an intra-day low of $91.06 on Monday before recovering more than $2 a share and trading in positive territory for the day.
Shares of Las Vegas Sands are trading higher by nearly 30 percent since the start of 2016 as the consensus appears to be indicate that the China-related macroeconomic fears have either been blown over or bottomed. Shares of Wynn Resorts are also higher by nearly 35 percent over the same time period.