Why Is WYNN Stock Getting Hammered?
Macau casinos are reeling as China UnionPay Co., Ltd. bank card holders will have their ATM withdrawal limit diced in half by Beijing in an attempt to combat the multi-billion-yuan outflow of capital. Among the hardest hit is Wynn Resorts, Limited (NASDAQ:WYNN), with WYNN stock down 11%.
The gaming industry has long been in the Chinese government’s sights as some have used the casinos to handle illicit money away from Beijing currency controls. As much as 10.0 billion Macanese patacas (MOP$10.0 billion)—or US$1.3 billion—in UnionPay ATM withdrawals were made in a single month, prompting a 100,000 yuan cap earlier this year. This led to Thursday’s decline of WYNN stock. (Source: “Beijing takes aim at Macau gaming industry to cut currency flight,” South China Morning Post, December 9, 2016.)
With Thursday’s news, however, China UnionPay holders’ withdrawal limit has again been reduced by half. From this Saturday on, ATMs in casinos will only dish out MOP$5,000.00, as opposed to the previous limit of MOP$10,000.00.
“What has happened is that individuals are turning up at ATM machines with stacks of cards from individual account holders and are withdrawing 10,000 a time,” a Macau finance industry insider told the South China Morning Post.
“The authorities have decided it is time to act and Beijing is backing the move.’’
Competitor casino companies MGM Resorts International
(NYSE:MGM) and Las Vegas Sands Corp.
(NYSE:LVS) fell 7.1% and 12.2% respectively, along with WYNN stock. (Sources: “MGM Resorts International
, last accessed December 8, 2016; “Las Vegas Sands Corp.
, last accessed December 8, 2016.)
“At the end of the day, national security is at stake for Beijing when it comes to the integrity of their currency and its outflow in massive amounts. This is what is behind these increasing moves by Beijing to stem capital outflow,” said Macau political commentator Sonny Lo, according to the South China Morning Post.
In any case, WYNN stock is now looking to rebound following the bad news.