KUALA LUMPUR (March 19): The warning issued by China's embassy in Singapore for its nationals to refrain from all forms of betting overseas is unlikely to have a significant impact on the casino in Malaysia, say analysts.
However, they said that the statement could have a more adverse effect on Singapore as the gaming resorts in Singapore are more dependent on foreign visitors.
Fortress Capital Group's chief executive officer Datuk Thomas Yong said the gaming sector in Southeast Asia would be affected if Chinese citizens are prohibited from cross-border gambling.
“For Malaysia, the impact would be smaller as it is believed that China's tourists accounted for only a small percentage of visitors to the casino. The casino patrons are largely Malaysian and Singaporean and the grind segment is relatively larger than the high-roller segment,” he told The Edge.
On the other hand, the casinos in Singapore would be more adversely affected as Chinese nationals contribute a larger portion of revenue, especially in the high-roller segment, he said.
Nevertheless, he noted that it remains uncertain whether there will be any enforcement by local governments where these casinos reside.
On Monday (March 18), Reuters reported that the Chinese Embassy in Singapore reminded its nationals to enhance their legal awareness and stay away from gambling activities. It said in a statement that cross-border gambling by Chinese citizens is suspected of violating the Chinese laws, even if overseas casinos are legally opened.
Meanwhile, Nomura analyst Tushar Mohata shared a similar view that the announcement will have a marginal negative impact on the integrated resorts in Malaysia and Singapore.
“Amongst Genting’s Malaysia and Singapore resorts, Singapore is more dependent on foreign visitors, as Malaysia is more of a domestic market. The exact impact is hard to quantify as it is still early days,” he told The Edge via email.
CGS International Chong Tjen-San also opined that the announcement would have an insignificant impact on Genting Malaysia Bhd as China has historically not been a huge contributor in visitor arrivals to Resorts World Genting in Malaysia.
While the number of Chinese visitors to the gaming resort doubled in the fourth quarter of 2023, the increase was attributable to the low-base effect a year earlier, he told The Edge, adding that the resort saw most of its foreign visitors coming from Singapore and Indonesia during the period.
At Tuesday's market close, Genting Malaysia Bhd saw its share price dip three sen or 1.03% to RM2.87, with 10.15 million shares changing hands, valuing the group at RM19.07 billion.
Prior to the announcement, analysts reported that the gaming sector in Malaysia and Singapore would be on a sustainable recovery trajectory following the anticipated return of Chinese visitors in 2024.
As of March 18, 2024, 13 out of 18 analysts had issued a 'buy' call on Genting Malaysia, while four suggested 'hold' and one rated 'sell' with the 12-month median target price for the counter at RM4.22, Bloomberg data showed.
China has been intensifying its efforts to crack down on Chinese citizens gambling across Southeast Asia.
The country cooperated with the Philippines to repatriate more than 40 Chinese nationals involved in offshore gambling last month. It also signed a Memorandum of Understanding (MOU) with Vietnam last year to cooperate in combating cross-border gambling.
Meanwhile, China’s embassy in Singapore said the Ministry of Public Security of China opened a reporting platform for combating cross-border and online gambling, where Chinese citizens can pass on clues and suspected activity.
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