Published on August 21st, 2019 | by Bibhuranjan0
Is it a good time to Invest in Casino Stocks?
Not so long ago, Casino Based stock took a dive world wide. This was mostly because of world wide regulations that were being put into effect by respective governments as well as a general drop of customers in the casino industry. While many location based casino businesses took a hit, online based casinos did manage to stay afloat like gametwist casino. So this raises a question, is investing in casino based businesses still profitable in 2019 or does the fall of the previous year still affect casino’s worldwide.
A Situation Overview
There are a lot of internal matters that has affected casino stocks worldwide. Major gambling hubs like Macau and Vegas too have been largely affected. This is in part with the the ongoing US-China Trade war, in which two superpowers are trying to ascertain financial dominance over one another through any means necessary. And quite recently China just lowered the value of the Yuan in a bid to gain a competitive advantage over international trade, which has led to some to form speculations on how the whole situation would further affect trading and commerce. This devaluation was in response to Trump’s tariffs on $300 Billion worth of Chinese goods.
This devaluation has especially been deemed as bad news for a lot of US based gaming stocks, especially those with Asian holdings, which saw their overall stocks fall very quickly after the announcement. The effect was especially worse in Hong Kong, where registered U.S. Gaming stocks from a lot of companies fell anywhere from 2.5-9%. In addition to that, this comes at a time when investors were pulling away from US based gaming stocks, after a 3-5 year steady rise, just last year.
The Silver Lining
While US casinos might not be doing so well right now, it is also speculated that specially administered regions of China, namely Hongkong and Macau are likely to stay away from the affects of the ongoing trade war. This is in part to the weaker Chinese Yuan versus the Stronger USD. And it also saw localized casino’s in these provinces getting a slight boost in its gaming stocks. However it is predicted that these casinos could eventually slow down too if the situation keeps worsening. And if it does, the affects won’t just be limited to these provinces but will eventually spread out to major casino hubs around the world. For now though, the affects seem to be minimal.
Another safe place would be the EU, especially around France and Spain, which act as the leading hubs for gaming related activity in the region. Also the casinos here enjoy strict moderation from the European Union and and its respective governments, which should in theory at-least allow for better control of the stocks during this financial onslaught.
Whether to invest
It might be safe to assume that heavy investment around gaming stocks might not be in the best of interests at the moment. The market seems volatile enough and although it is not an outright mess at the moment, the response of Chinese Govt. might be the ultimate decider of what happens in the future.
However if you do want to invest, here are a few key takeaways analyzing the current situation:
1. Analyzing the which stocks are doing well
Casino’s aren’t a singular entity and almost all of the revenue is generated on different gaming platforms or other commodities. Analyzing the stock performance prior to investing can potentially pay off massively once the whole situation stabilizes. For example, if you are investing directly in the casino holdings of a company, getting a thorough report of the company stock performance will allow you to decide if the stock is worth investing in. Also important here to analyze casino stock patterns in those holdings. Your analyst can probably predict the ongoing and future trends of the stock by looking at said stock performance patterns.
2. Assessing the Local Market Volatility
Depending on the region and its international trade relations, it might be a good/bad place to go for potential investment opportunities. Free-Market economies are generally the best places since they have a very stable economy which favors investment. That is why places like Singapore or Macau are usually hot destinations for casino investors. However if the region, despite its economic standing faces internal/external pressure, then it isn’t a good idea to invest in these places. For example, casino stocks in HongKong saw a substantial dip ever since the ongoing dispute of its future with China.
3. Finding out whether the region if affected by the current crisis
On a broad scale, almost every country has been affected by the Trade war in some way. However the magnitude of the effect is what should be considered while picking out ripe casino stocks for investment. If the affects of the trade war seem minimal on the countries, then it might be a very good place for investment in these times. Ultimately the region’s volatility will determine its stock performance.
Casino stocks are best avoided as of now. The market is way too fragile and many gambling holdings are reporting record losses after a very stable growth. It is best to let the market settle before making any serious investment in gaming stocks. The extent of this trade way is yet unknown and as neither Trump Administration or Xi Jinping is willing to cooperate with the other.