Casino Investors Say 'No Dice' to Gambling Stocks With Macau Exposure

Investors are walking away from casino operators that have exposure to Macau because of worries about the deadly coronavirus. Players and croupiers are wearing masks at the tables.
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Investors were walking away from casino operators that have exposure to Macau due to continued worries about the spread of the deadly coronavirus.

The VanEck Vectors Gaming EFT (BJK) - Get Report was down 4% to $39.95, and shares of major casino companies tumbled as the virus, which started in China, continues to spread.  

Some of the big players feeling the pain include Las Vegas Sands (LVS) - Get Report, down 4% to $62.97;  Wynn Resorts (WYNN) - Get Report, off 4.3% to $122.38, and MGM Resorts International (MGM) - Get Report, which was sliding 5.6% to $29.63.

Dubbed the Las Vegas of Asia, Macau is the world's biggest gambling hub, making about 80% of its revenue from casinos.

The autonomous region, located across the Pearl River Delta from Hong Kong, reported gross gambling revenue of $36.5 billion last year, down 3.4% from the year before but still about six times that of the Las Vegas Strip.

On Feb. 5 the Macau government closed the casinos for 15 days to contain the virus. The casinos reopened last week, but all players and croupiers had to wear masks at the tables.

Macau's gross gambling revenue could be down 89% in February and 56% in the first quarter from the year-earlier periods, Analyst Noah Hudson at Guotai Junan Securities  said Monday, according to the South China Morning Post.

Confirmed cases in China, where the outbreak began last year, numbered 77,150, with 2,592 deaths, according to China's National Health Commission. 

The World Health Organization reported 79,407 cases of the virus and 2,622 deaths worldwide.

Italy confirmed 150 cases of the virus, with officials verifying at least three deaths in Europe's third-largest economy. 

Iran has said as many as eight people have died, while the number of coronavirus cases in South Korea has jumped to just under 800, the most outside China.

"Unfortunately, FDR had it right when he said the 'only thing we have to fear is fear itself,' and fear is going to be with us for weeks, if not months," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"So the stock market is going to move lower in the short run before bottoming and going back to all-time highs again."