US-Based Macau Operators Not in Crosshairs, Says Chief Executive

The three Macau concessionaires based in the US will not face retaliation if US/China trade tensions escalate, as stated by the chief executive of the Special Administrative Region (SAR). 

During a Tuesday press conference after Xia Balong's visit, the director of the Hong Kong and Macau Affairs Office, Sam Hou Fai remarked that the three American companies running Macau casino hotels will not be focal points if US/China geopolitical tensions heighten.

"Foreign investments are highly welcomed in the Macau SAR,” he said. “This is also one of the goals outlined in my recent policy address. According to the law, and as long as they comply with local regulations, all foreign investments will be protected and supported.”

His remarks align with views from certain sell-side analysts who have recently suggested that the US/China trade dispute, even if it intensifies again, is not expected to lead to “retaliatory tariffs” against divisions of Las Vegas Sands (NYSE: LVS), MGM Resorts International (NYSE: MGM), and Wynn Resorts (NASDAQ: WYNN). 

 

A Bit of Relief for Macau Operators in the US 

Sam's remarks came the day after gaming stocks, including the previously mentioned companies, surged due to reports that the world's two largest economies advanced in trade discussions. 

Last weekend, officials from the US and China convened in Switzerland and agreed to reduce tariffs for 90 days on exports between the two nations while creating a structure for ongoing discussions. The two countries emphasize "the significance of a sustainable, long-lasting, and mutually advantageous economic and trade partnership," as stated in a joint declaration. 

The trade agreement, along with Sam’s later comments, brought reassurance for Las Vegas Sands, MGM, and Wynn. Sands and Wynn are especially two of the most US companies reliant on China outside of the tech sector when considering the percentages of revenue and earnings produced from that nation. 

MGM China, Sands China, and Wynn Macau together operate nine integrated resorts in the SAR. Five of those locations are run by Sands China, establishing that company as the largest in Macau. 

 

Macau Seems Dedicated to US Operators 

Sam’s remarks suggest a wider dedication of Macau to the US-based concessionaires. The licenses of all six operators were renewed for a duration of 10 years, starting on Jan. 1, 2023. During the peak of the recent trade tensions between the US and China, there were concerns that the Chinese government might intervene and advocate for penalties against casino operators based in the US. 

This could manifest as not renewing licenses or mandating early exits from the SAR; however, such results are not attractive to Beijing and Macau due to the small number of gaming firms — perhaps fewer than three — capable of sufficiently replacing MGM, Sands, and Wynn if they were expelled from Macau. 

Those worst-case situations now seem improbable, and US-based Macau operators' shares might experience more short-term gains if the US and China achieve additional trade advancements.