The outlook on Macau casino plays, one of the best performing sectors this year in the Hong Kong stock market, has turned mixed after the counters repeatedly scaled new highs in recent months, raising questions about the valuations. Those hesitant to jump on board do indeed have a good reason.
The whole gaming sector has a price tag of about HK$1.5 trillion (US$192 billion). Sands China (01928.HK), the biggest in terms of market value, is worth more than HK$500 billon and Galaxy Entertainment Group (00027.HK) is close to HK$300 billion.
To get an idea of how inflated the sector is right now, one can take a look at its market value vis-a-vis the broader economy. Hong Kong’s gross domestic product (GDP) last year was about US$263 billion while the size of Macau’s economy was just US$44 billion.
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