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Options (27) traders see no end to the retreat that erased about $12 billion of market value from Galaxy Entertainment Group Ltd. this year through yesterday as declines in Macau gaming revenue accelerate.
Puts hedging against a 10 percent drop in Galaxy shares cost 3.25 points more than calls betting on a 10 percent advance yesterday, data on one-month options compiled by Bloomberg show. The price difference rose to 4.22 on Sept. 30, the highest since July 2013. Galaxy and Sands China Ltd. (1928), a unit of billionaire Sheldon Adelson?s Las Vegas gaming company, are the worst-performing stocks on the Hang Seng Index this year amid China?s economic slowdown and a campaign to curb graft and officials? extravagance that is scaring off high-rollers.
?Macau gaming stocks look cheap, but they?re going to remain so because the anti-corruption measures in China have affected consumption,? Kelvin Tay, Singapore-based chief investment officer for Southern Asia-Pacific at UBS Wealth Management, said in an interview on Oct. 2. ?People are less willing to spend in a very ostentatious way. The slowdown in the Chinese economy has also affected consumption, so the gaming stocks in Macau are a victim of these trends.?
Gross casino revenue in the world?s biggest gambling hub dropped 12 percent in September, the steepest slide since June 2009 and a fourth month of declines, official data released this week showed. VIP players account for more than 60 percent of the city?s gambling receipts. Galaxy gained 1.6 percent to HK$47.90 at today?s close in Hong Kong, while Sands China added 1.2 percent to HK$42.65.
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