Macau is looking to open its own stock market

World’s casino hub considers opening a stock market to diversify economy.

Macau.- It seems like the odds are not in Macau’s favour; Its small size and equally small financial industry may prove to be a major stumbling block in its ambitions to launch a vibrant stock market. The task looks even more daunting since it has to contend with a giant stock exchange next door in Hong Kong, say analysts.

So far Macau’s focus has been on gaming and tourism, but revenues from gaming have been steadily falling, as a result of mainland Chinese stay away from the gambling destination amid a slowing economy. According to the Macau Gaming Inspection and Coordination Bureau, gross gaming revenue fell 9% year on year to €2,7 billion in August – its biggest monthly drop since June 2016.

This may explain why Macau wants to bet on something new – a Nasdaq-like stock market traded in offshore yuan. That would allow technology companies from the Greater Bay Area – which includes Hong Kong, Macau, Shenzhen and also eight other cities from southern China – to raise funds.

He Xiaojun, director of Guangdong’s Local Financial Supervision and Administration Bureau, said on Sunday that he hoped China’s central government might give its blessing to the plan for the stock exchange by mid-December, as a gift for the 20th anniversary of the city’s return to Chinese administration.

Clement Chan Kam-wing, managing director of accounting firm BDO, said the Macau government should be lauded for its innovative thinking and vision for such a plan.“However, a significant stock exchange operator has to be supported by a lot of other complimentary developments. Therefore, Macau has a long way to go to establish the essentials,” Chan said.

Hong Kong just “around the corner”

Similarly, Hong Kong, one of Asia’s biggest financial centres, is the region’s third largest stock market. Eight Macau-domiciled companies are listed on HKEX – six of them casino operators; including SJM Holding, owned by “King of Gambling” Stanley Ho Hung-sun and his extended family, Wynn Macau and MGM China. Moreover, the exchange’s popularity as a listing destination was crowned as the world’s top IPO market six times in the past decade.

Hong Kong has almost 600 stock brokerages and 164 licensed banks; including 70 of the world’s largest players such as HSBC, JPMorgan Chase, Morgan Stanley, Goldman Sachs. Macau, on the other hand, has only 30 lenders, most of which are arms of mainland Chinese banks.

Finally, if Beijing were to give the go-ahead to Macau, the new stock market will be the fourth in China and the third in Greater Bay Area – after Shanghai, Shenzhen and Hong Kong.