Summary
- Casino revenue data in May is an alarming signal echoing previous investor concerns over the impact of the crackdown of corruption and money laundering on casino operations.
- June data could be a big miss due to the World Cup.
- More unfavorable policies to come - Shortened term for stay of mainland transit visitors and smoking ban.
- LVS has been unable to break the downward trend line (lower highs), while WYNN failed to break the resistance at $220 with its release of impressive 2014Q1 results.
The Gaming Inspection and Coordination Bureau of Macau released the casino revenue data in May, which showed a yearly growth of 9.3% but fell short of analyst expectations of 13-15%. In response to the news, Macau-gaming-related stocks, such as Las Vegas Sands (NYSE:LVS), Wynn Resorts (NASDAQ:WYNN) and MGM Resorts (NYSE:MGM) plunged around 2%-6% in the last trading session. Although some people may consider that the price decline was overdone since the revenue growth still maintained at a high single-digit percentage, smart money, in my opinion, should launch short positions in these stocks or at least stay on the sidelines in the next few months, based on the following reasons:
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