The trade war between China and the United States is one of the most currently discussed issues. It looks very likely that Sheldon Adelson is going to influence the situation in a positive way.
At present, buying Macau is risky enough, even in case of reducing tensions between the two countries. However, if the war came to an end, traders would be able to start watching local stocks with the aim of a potential entry.
According to media reports, Adelson phoned the American president and strongly suggested that he stop encouraging the conflict. There is no detailed information regarding what exactly they were talking about. However, the fact that the phone call has been disclosed to the public means that at least one of the interlocutors was interested in making the story public.
Concerning Adelson, his operating permit for Las Vegas Sands’ casinos in Macau expires in two-years’ time. He needs to secure his business since Trump already has experience in destroying companies. One more reason for Adelson to interfere in the situation is that by the end of the previous financial crisis his fortune had decreased by over ninety percent. Therefore, he realizes he might lose everything and is trying to prevent this from happening.
Mass media inform that the phone call took place some time after Trump’s post on Twitter regarding increasing tariffs by the beginning of October. Judging from the fact that it never happened, Adelson managed to influence the decision at least to some extent.
If China gets through October and the celebration of the People’s Republic’s seventieth anniversary without the social and economic situation getting out of control, it would become more or less safe to return to Macau.
However, the majority of investors do not pay attention to Macau’s currency system dependence on the HKD (Hong Kong dollar), which in its turn is pegged to the USD. After long periods of protests, the economy of Hong Kong gets worse. Thus, the central bank has to turn to its foreign exchange reserves to protect the peg. As a result, by the end of summer total forex reserves decreased by 3,5% and this trend is expected to continue. Nevertheless, there is no reason to panic since Hong Kong still has about $433bn to protect the peg. Besides, starting from 2016 it has been raising interest rates.
In case Trump’s competitor in the elections 2020 will be Elizabeth Warren, US stocks will most likely go crazy. However, Macau’s stock won’t be influenced much by the possibility of Warren’s presidency.
Therefore, in November investors might not only monitor Macau for a potential move but start feeling their way in the market.
As mentioned earlier, the Chinese government supported Cambodia in its effort to impose a ban on online gaming activities.
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