Junket investors are becoming increasingly likely to seek other – safer – investment opportunities as the junket business languishes, Union Gaming analysts say.
“While we think that as of today there is enough liquidity in the system to meet current levels of demand, we are not convinced this will remain the case,” Grant Govertsen wrote in a note.
Junket investors are constantly exposed to news detailing the VIP business in Macau declining, while at the same time hearing about individuals who lost money in the Dore scandal.
“The natural reaction, in our view, would be to seek alternative investments. As this money is pulled out of the junket system we believe this could lead to yet another leg down in VIP GGR, while at the same time accelerating the collapse of more junkets.”
Aside from China’s anti-corruption drive, UG attributed the VIP industry’s woes to a slowdown in the broader Chinese economy, real estate softening, attacks on the shadow banking system and the rise and crash of the Shanghai exchange.