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Macau stock market on the horizon?

Thu, Jun 6, 5:18pm by Staff Writer

Macau is considering launching a yuan-based stock market to help it diversify away from gaming, its main source of revenue, and align the territory more with China’s growth plans for the Greater Bay Area in the country’s southern region.

Macau’s Monetary Authority told Reuters in an email that it was starting feasibility studies for a securities market, including a stock market, which would “leverage Macau’s advantage to serve the country’s need,” compared with established centres Hong Kong and Shenzhen.

South China Morning Post is reporting the former Portuguese colony and now the world’s largest casino hub, has struggled to shift its economy away from gambling, where gross gaming revenue totaled US$38 billion in 2018.

The gaming industry contributes to more than 80 per cent of government revenues.

Beijing is pushing for the special administrative region of Macau to become an international tourism destination as well as a platform for trade and business between Portuguese speaking countries and China.

“Macau has a very strong position in promoting itself as the financial service platform between the Mainland and Portuguese-speaking countries and the mentioned feasibility studies will be conducted under this context and advantages,” the Monetary Authority said.

China’s cabinet earlier this year unveiled guidelines for the Greater Bay Area around the Pearl River Delta, to spur growth in Guangdong province and the cities of Hong Kong and Macau.

Market would help Macau diversify from gambling

The plan stated it would support Macau in developing financial products and services as well as a securities market and a green finance platform.

Macau has started to develop financial leasing, wealth management and yuan clearing, but services and volumes pale in comparison with neighbouring Hong Kong.

The government last year approved the first financial institution, called Chongwa (Macau) Financial Asset Exchange (MOX), to provide bond trading.

There have been three bond issuances listed so far.

Carlos Alvares, chief executive at Banco Nacional Ultramarino (BNU), a note issuing bank in Macau, said BNU in June would start a new business line in leasing.

Macau’s yian securities market “won’t be competing with Hong Kong, we will be complementary to Hong Kong, because our focus is mainly on Portuguese-speaking countries,” he said.

Market participants were cautious to comment on the significance of a stock market launch in Macau, given the early stage of planning.

However, a source at a Chinese state-owned financial institution, who requested anonymity as the matter involves national policy, said, “plans to develop Macau’s financial markets are gimmicks,” citing a lack of necessary infrastructure to support such a market.

The idea of opening a stock market in Macau dates back more than 20 years during Portuguese rule, casino industry executives said.

Macau was handed back to China in 1999.

Rising crime in Macau a concern

The gambling mecca of Macau has been a world-leading destination for gambling for some time now.

The island is the only place in China where gambling is legal, so it attracts many visitors from mainland China and the surrounding areas of Asia.

There have been concerns about the recent slowing Chinese economy and what impact that will have on Macau’s casino trade.

Rising crime rates at casinos are now also a problem, with efforts ongoing to try and clean up the impact of the island.

Vegas Slots Online is reporting that in the past year, instances of money laundering at casinos have decreased by six per cent, but loan sharks constitute another problem.

Overall, casino crime has risen more than 14 per cent in the same period, leading local authorities to develop a tougher stance.

The island’s crime figures show that there were 438 gambling related crimes in the first quarter of the year.

Illegal loans have increased by 37 per cent to 81 reported cases.

This was after loan sharing activity rose by almost 26 per cent in 2018 compared to 2017.

Law enforcement authorities are now placing more of an emphasis on loan sharking.

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