Inside Asian Gaming

inside asian gaming January 2015 4 EDITORIAL Inside Asian Gaming is an official media partner of: www.gamingstandards.com Inside Asian Gaming is published by Must Read Publications Ltd 5A FIT Center Avenida Comercial de Macau Macau Tel: (853) 8294 6755 For subscription enquiries, please email subs@asgam.com For advertising enquiries, please email ads@asgam.com or call: (853) 6680 9419 www.asgam.com ISSN 2070-7681 Publisher Kareem Jalal Director João Costeira Varela Editor James Rutherford Editor At Large Muhammad Cohen Business Development Manager Danilo Madeira Contributors Paul Doocey, John Grochowski, James Hodl, Matt Pollins, I. Nelson Rose Graphic Designer Rui Gomes Photography Ike, Gary Wong, James Leong, Wong Kei Cheong James Rutherford We crave your feedback. Please email your comments to James@asgam.com Fear and Loathing I nvestors who’ve bought heavily into the Macau boom story can’t be too happy right now with the extent of our collective ignorance about China and its complexities. About US$75 billion of share value has gone up in smoke in the space of a year, and it could get worse, as it appears that what President and Communist Party General Secretary Xi Jinping has unleashed with his anti-corruption campaign is of a dimension far beyond what its supporters from the outside thought they were cheering on. Operators and analysts blame Mr Xi’s crackdown for the dramatic decline in high-roller play that plunged Macau into negative revenue territory in 2014 for the first time in the post- monopoly era and sent the Hong Kong-listed shares of the six casino concessions into a freefall from which they’ve yet to recover. Speaking of this, Standard Chartered analyst Philip Tulk was moved recently to declare: “The VIP heyday is over.” If he’s right, then investors must be wondering how it went south so quickly. Macau gaming as a stock market play is not even a decade old. The heyday had hardly begun. And if he’s right, and he’s far from the only one who believes the market has hit a wall, then the bigger question is: How much don’t we know about China still? In official media on the mainland they talk about the “Shanxi Gang,” the “Yunnan Fiefdom,” the “Jiangxi Gang” and in Guangdong of the “Wan Qingliang Clique”—collective tarrings reminiscent of the excesses of the Cultural Revolution—and these appear to be suggestive also of a massive leakage of power over the years into the clutches of party satraps at the provincial and municipal levels. Mr Xi looks determined to break the back of this latter-day warlord- ism, and revitalizing the party as moral standard-bearer for the nation in the best (or worst) Maoist tradition appears to be integral to the campaign. Reports in Western media have it that academics, journalists, artists and writers are under greater pressure to toe the line than they have been in years. In an interview with NBC News , James McGregor, former head of the American Chamber of Commerce in China, said of Mr Xi, “He’s using the tools of Mao to become a Deng Xiaoping 2.0. He’s taking on a gangster-type system, and to do that you’ve got to use the tools at your disposal. He’s trying to change behavior. He sees this as a survival thing for the party.” That’s one view. Long-time China-watcher Anne Stevenson-Yang, a director of J Capital Research, which advises foreign investors, sees the crackdown differently, describing it for Barron’s as an “an old-style party purge reminiscent of the 1950s and 1960s with quota-driven arrests, summary trials, mysterious disappearances and suicides”. As for the tools, the most feared among party members is the Central Commission for Discipline Inspection. Bo Xilai was merely the first to lay his head beneath its ax. A train of others has followed, and it’s getting longer as it reaches higher into the political and economic life of the country. Just to be named on the CCDI’s Web site, as upwards of 700 cadres have been, trials or convictions notwithstanding, is death to a career. Denunciations are reported to be rife. The South China Morning Post says more than 75,000 party members have been investigated since Mr Xi assumed power in 2012. On average, 10,000 a month are being “disciplined,” according to state news agency Xinhua . The fear factor is such that Caixin – China Economics & Finance , a magazine published by a prominent Beijing media group, says local administration in some areas is grinding to a halt. “Nobody is sleeping well now,” said Bo Zhiyue, a veteran sinologist with the National University of Singapore. Echoing Ms Stevenson-Yang, he told the Post , “There is a lot of uncertainty and there are no clear rules as to who gets investigated. … These are not solely cases of corruption, they’re political judgment calls.” Investors wondering what the immediate future holds will want to be aware of how close their money has resided to one of the epicenters of the campaign. The aforementioned Wan Qingliang, disgraced party secretary of Guangzhou, the capital of Macau’s neighboring province of Guangdong, and Guangzhou Vice-Mayor Cao Jianliao are two of the biggest names to be taken down. Guangdong is China’s most populous province and its wealthiest by gross domestic product. It is Macau’s largest and most significant feeder market. Guangzhou is its economic heart, the hub of the mainland’s largest metropolitan area. At least 65 senior, middle- and lower- ranking officials have come under CCDI investigation in Guangdong, far more than anywhere else in the country.