Unstructured Finance

Adelson splashes the pot in Asia

Sands China’s weak debut in Hong Kong - a first-day drop of 10 percent – was the fourth-worst launch on that market this year, but came as little shock to analysts who were betting against the Asian gambling play. Rival Wynn Macau is down 5 percent since listing in October.

Sands China’s $2.5 billion IPO wasn’t helped by the default tremors kicked off by Dubai, which has helped to expose a whole new area of risky bets in emerging markets.

“The fever for casino stocks is seen to be over now,” said Patrick Yiu, a director at CASH Asset Management. “Investors are worrying about the industry outlook, especially keen competition, when more casinos are ready for business.”

“We’re not in this for a day’s trading, we’re in it for the long term,” Las Vegas Sands CEO Sheldon Adelson said.

So is this a time to hold ‘em, fold ‘em, walk away or run? Adelson clearly is not counting his money while sitting at the table, and there will be many who argue that betting against the Chinese appetite for gambling never made anyone rich. More likely, fund managers will look for more attractive price points to place their bets, while Sands plays with house money.

Wynn’s sure thing in China

Nobody ever got poor betting on Chinese demand for gambling, though the big players in Macau have seen a few busted flushes along the way. With more than a billion fatalists eager to hit the tables, and only one place to do it (Macau is China’s only legal gambling venue), it’s not hard to see the case that Wynn Macau and Las Vegas Sands are making for Hong Kong investors. It’s the same story Hong Kong and Macau magnate Stanley Ho has made for decades.

Wynn Macau’s $1.63 billion Hong Kong IPO, the sixth-largest in the world this year, was considered rich, despite the hype and that “sure thing” ring. After all, the colony is covered with half-finished projects and other remnants of the last time this too-good-to-be-true investment turned out to be what it was.

Wynn Macau shares ended 6 percent higher on Friday, valuing the casino giant at $6.9 billion. The solid debut bodes well for rival Las Vegas Sands, which plans to raise up to $2 billion in a Hong Kong offering for its Asia assets, most notably in Macau.

DealZone Daily

On a quiet day for deals, worth noting that Royal Bank of Canada joins the growing queue of prospective buyers of a wealth management business. Read the exclusive Reuters story here. On a larger scale, Wynn Macau‘s strong debut in Hong Kong ups the ante for Europe, where bookbuilding for the IPO of Poland’s PGE starts next week. For more deal-related news from Reuters, click here.

Elsewhere:

* The U.S. Federal Deposit Insurance Corp is questioning the positive conclusions given to Citigroup Inc’s management team in a government-mandated review in the aftermath of the financial crisis, the Wall Street Journal says.

* A management buyout of Malaysia’s national carmaker Proton Holdings could be possible, the firm’s chairman was quoted as saying in the Star newspaper.

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