Travel and casino share prices tumble
The Crown Resorts share price has come under pressure and is tumbling notably lower on Tuesday.
In afternoon trade, the casino and resorts operator’s shares are down four per cent to $11.55, according to Yahoo.
At one stage, Crown’s shares were down as much as 7.5 per cent to $11.15.
Investors have been selling off travel shares today following concerns over the outbreak of coronavirus.
A number of cities in China hae placed restrictions on travel in an effort to contain the virus.
This, combined with the US government’s recommendation to avoid travelling to China, has sparked concerns that the travel market could be negatively impacted in the near term.
Other travel shares under pressure include Corporate Travel Management Ltd, Flight Centre Travel Group, Qantas Airways Limited and Webjet Limited.
The latter is the worst performer on S&P/ASX 200 index.
Thought, some of its underperformance can be attributed to the online travel agent copping a broker downgrade this morning.
This was due partly to concerns that Google could be stealing market share away from its business to customer business.
Coronavirus having impact on casino shares globally
In respect to Crown, it has come under pressure today after US casino stocks were sold off overnight.
There are concerns that the coronavirus could limit the number of Chinese VIPs visiting casinos across the world.
This would be bad news for Crown as Chinese VIPs contribute meaningfully to its profits.
If they don’t travel to Australia, it could create a gap in its earnings in the near term that will be hard to fill.
Fellow casino and resorts companies SkyCity Entertainment Group and Star Entertainment Group are also nursing sizeable declines.
Crown’s sale to Melco not flagged and could be licence breach
Crown Resorts’ failure to alert authorities about a sale of shares to the Macau-based Melco International before the deal was announced publicly could be a breach of its casino licence and raises questions about Crown’s suitability as a casino operator, the counsel assisting a New South Wales inquiry into the casino giant, Adam Bell SC, has said.
The Guardian reports that the inquiry, which began on Tuesday, is expected to call the billionaire businessman James Packer and the Melco International chairman, Lawrence Ho.
It is also expected to hear from a raft of Crown and Melco executives as it seeks to probe whether both Crown and Melco are suitable to exercise control over the high-roller casino licence at Barangaroo in Sydney granted in 2014.
The inquiry was sparked by last year’s announcement that Melco plans to buy 19.9 per cent of Crown from Packer’s CPH Holdings and by allegations of money laundering and the involvement of organised crime in Crown’s Melbourne casino made in the Nine newspapers.
The former supreme court judge Patricia Bergin SC held an open hearing on Tuesday, but the inquiry gets under way in earnest on 24 February, when it will begin the first part of its investigation.
This will look into the vulnerability of casinos to money laundering and the role of junkets and links to organised crime.
A second tranche of hearings is scheduled for March and will look into the sale agreement with Melco and whether the transfer of shares would give rise to any breach of the licence.
A third set of hearings will look into allegations made in the Nine publications about Crown’s involvement with money laundering and organised crime, while two final blocks of the inquiry will look at Melco and the suitability of any close associates, and strengthening future regulation.
In his opening remarks, Bell said Crown had not alerted the casino authority about the CPH-Melco deal ahead of time in order to allow it to assess the suitability of the new shareholder.