Macau’s government said the daily cash withdrawal limits for mainland China-issued ATM cards is being left unchanged, after a report that the number would be reduced by half roiled casino stocks worldwide.
Cardholders will continue to be able to take out as much as 10,000 yuan ($1,450) every day, according to a government statement. However, the limit on each transaction will be halved to 5,000 patacas ($626) or HK$5,000 ($644) effective Friday to “to further strengthen the measures to regulate Mainland bank card cash withdrawals,” the government said. South China Morning Post had reported that China is imposing a 50 percent cut on China UnionPay Co.’s daily ATM withdrawal limits in Macau.
Macau casino shares pared losses. Investors in gaming stocks are particularly sensitive to measures by China to tighten its capital controls as depreciation pressure builds on the yuan. The city’s $30 billion gaming industry is rebounding after two years of contraction as operators including Wynn Macau Ltd. opened new resorts. Gross gaming revenue rose for the fourth straight month in November, recording the strongest year-on-year growth since February 2014.
Union Gaming analyst Grant Govertsen said the new caps are aimed at stemming the recent increase in overseas ATM transactions as a way for some mainland Chinese to convert yuan to HK dollars due to ongoing yuan weakness. The ceiling will make currency conversions to Hong Kong dollars less attractive by doubling transaction fees, he wrote in a note.
“We steadfastly believe the government (both mainland and Macau) are not targeting the gaming industry,” Govertsen wrote. “Both governments want to support the ongoing mass market recovery rather than implement policy that might derail it.”
The withdrawal limit on each ATM transaction has “virtually no impact on gaming demand/fundamentals, and limited overhang on sentiment/stocks,” wrote DS Kim, an analyst at JPMorgan Chase & Co. in Hong Kong.
Macau’s gross gaming revenue won’t be affected by the new ATM transaction change limit, although the withdrawal limits may change in the future, according to Vitaly Umansky, an analyst at Sanford C. Bernstein & Co. Nearly half of Chinese customers in Macau use UnionPay ATM withdrawals as a source of cash for gaming, with other methods include bringing cash directly, withdrawing cash from Hong Kong and Macau bank accounts, and through local pawnshops, Umansky wrote in a note.
UnionPay International, a China UnionPay subsidiary focused on the global business, hasn’t changed its overseas cash withdrawal limit policy for cards issued in mainland China, the company said in a statement Friday. The limits remain at 10,000 yuan per day, and 100,000 yuan per year, it said.
Macau has continued to tighten scrutiny of its casino industry amid the nascent gambling revenue recovery. Stricter regulations concerning junket operators, money laundering and phone betting this year are likely to benefit the Chinese territory’s business, Paulo Chan, director of the Gaming Inspection and Coordination Bureau, said in an interview this week.
The Macau government began restricting UnionPay debit cards in 2014, ordering jewelry shops and pawnshops on casino floors to remove the company’s card terminals. In Hong Kong, UnionPay account holders were blocked in October from using their cards to buy insurance, which gave them another potential way to move money overseas by swiping the cards multiple times.
Macau is in the midst of a surge in new casino construction, with new billion-dollar resorts popping up that target casual gamblers instead of the high rollers that form the bulk of its gambling customers.
