Sands China drops in debut after Dubai hurt confidence

Las Vegas Sands Corp.'s Macau unit, operator of the world's biggest casino by floor area, slid 13 percent to HK$9 at the midday trading break in Hong Kong, after earlier falling as low as HK$8.78. Sands China raised HK$19.4 billion (US$2.5 billion) in the city's biggest initial public offering this year.

The company and parent Las Vegas Sands sold a 23.2 percent stake in its Macau business to repay loans and resume construction of a 13.3 million square foot casino-resort in the world's biggest gambling hub. While Sands China's fundraising makes its plan to recreate the Las Vegas Strip in the Chinese city viable, news of a possible default by Dubai World contributed to “some negative sentiment” toward tourism-related companies, independent strategist Jonathan Galaviz said.

“Half of Dubai's story is tourism,” Galaviz said in a phone interview Monday. “There will probably be some negative sentiment toward tourism assets globally, such as casino operations, as Dubai gets squared away.”

Sands China closed at HK$9 on Friday in so-called grey market trading, according to PhillipMart in Hong Kong. The grey market acts as an over-the-counter marketplace for equities that are about to start trading on a stock exchange.

Other casino operators rose Monday as investors took advantage of Friday's declines, Steven Leung, director of institutional sales at UOB Kay-Hian Ltd., said in a phone interview yesterday.

Wynn Macau Ltd., the unit of billionaire Stephen Wynn's casino company, surged 5.3 percent to HK$9.73. SJM Holdings Ltd., billionaire Stanley Ho's holding company and the biggest casino operator in Macau by market share, climbed 3.7 percent to HK$3.95. Melco International Development Ltd., run by Ho's son Lawrence Ho, advanced 2.4 percent to HK$3.91 while Galaxy Entertainment Group Ltd. rose 1.8 percent to HK$3.41.

Investors are having difficulty deriving valuation for Macau casino stocks, said John Koh, regional investment director at MEAG Hong Kong Ltd.

The completion of Sands China's resort will strengthen Adelson's challenge to 88-year-old Stanley Ho's SJM. Sands' project was halted in November 2008 after credit markets seized up and revenue dwindled.

Sands China and its parent had sold 1.87 billion shares for HK$10.38 each, at the bottom of a price range, initially valuing the Macau casino operator at HK$83.5 billion, according to Bloomberg calculations. Today's decline cut its market value to about HK$72 billion.

Sands China is at least the seventh newly listed stock to decline on its first day of trading in Hong Kong since September.

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