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Typhoon batters Macau, taking casino stocks with it

Casinos rise from the skyline of Macau, China.

Jerome Favre | Bloomberg | Getty Images

Casinos rise from the skyline of Macau, China.

Casino stocks traded lower after typhoon Hato battered the Asian gambling hub of Macau on Tuesday evening, causing power and internet blackouts.

Even while some casinos used backup generators, Union Gaming analyst Grant Govertsen believes the typhoon will hurt Macau’s casino revenue.

This could turn around six consecutive months of double-digit percentage growth in Macau’s staple business. Analysts at brokerage Sanford C. Bernstein anticipated 22 percent to 25 percent growth for Macau’s casino gross gaming revenue in August.

The big U.S. casino companies have been spending billions of dollars in the past year expanding operations in Macau, a former Portuguese enclave and the only area in China where casinos are legal.

Shares of Las Vegas Sands were down more than 1 percent in midday trading Wednesday. Melco Resorts stock was down more than 1 percent as well, with Wynn Resorts down nearly 2 percent and MGM down less than 1 percent.

Govertsen says “the previously exceptional August growth rate” will take a significant hit of “at least a couple hundred” basis points. He warned that decline could worsen if damage to the region is worse than initial reports suggest.

Macau’s Gaming Inspection and Coordination Bureau, called DICJ, has told casinos to cease operation if power to the region is not restored quickly.

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