Casino Stocks Take a Hit as the House Loses
There are reports on Tuesday morning that the casino industry has taken a major fall. Las Vegas Sands (NYSE: LVS) is down approximately 4.5 percent at the time of writing. Wynn Resorts (NASDAQ: WYNN) is down 5.6 percent, and MGM Resorts International (NYSE: MGM) is down 8.3 percent.
The fall seems to be stemming from the fact that the Chinese economy is slowing, reporting poor manufacturing data on Monday night. Less disposable income in China means less money spent on Macau.
Bloomberg is reporting that the Chinese manufacturing index dropped to its lowest level since February 2009.
“The Purchasing Managers' Index fell to 50.4 in October from 51.2 in September, the China Federation of Logistics and Purchasing said in a statement today. That was lower than any of 16 economist estimates in a Bloomberg News survey that had a median forecast of 51.8. A reading above 50 indicates expansion.”
While there were signs of a rebound on Tuesday morning, investors have been left confused. While China and Macau is not the be all and end all for the casino industry, significant slowing down of the growth like this has an inevitable impact.
According to Bloomberg, “The data “indicate fourth-quarter economic growth will continue to slow,” Zhang Liqun, a senior researcher at the Development Research Center of the State Council, said in today's statement. “Export and investment growth will continue to fall.””
The casino industry should take note and prepare for fluctuations.
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