Morning Report Tuesday 4 November 2014
On Cup Day, what else could we revisit than the gaming stocks? Especially with Barrangaroo Sydney Casino development evolving rapidly and the second Brisbane casino licence up for grabs. Both Crown (CWN) and Echo (EGP) are in the running for the Brisbane licence and the winner is likely to get a nice lift in its share price, even if revenue will be years in the future. The dominant factor for overseas casinos has been the regulatory clamp down on “junkets” out of China and this has led to a significant fall in the Crown share price with the other 3 stocks discussed below, likely to have been a part beneficiary of the funds exiting Crown.With my overall market view targeting a 15% correction to US equities as the next major move, albeit likely to be from higher levels, I am reticent to be a buyer of stocks in general at current levels, but the gaming sector has a low correlation to the ASX200, especially due to regulatory decisions having major impact on the company’s operations.
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