MGM’s Macau woes spread to Hong Kong

November 8, 2021 Earnings & Filings Industry Updates

Two executives at Hong Kong-based Snow Lake Capital have quit amid bad bets including Chinese stocks, the Financial Times reported, forcing it to liquidate one fund and retrench. The turmoil spotlights the hedge fund’s disastrous position in MGM China (2282.HK).

In January, Snow Lake disclosed a 7.5% stake and called for the casino company to sell a fifth of its Hong Kong-listed unit, worth $6 billion at the time, to a Chinese investor, only to be rebuffed. An increase in local ownership could have played well as casino companies prepare to rebid for their local licence in 2022. Regulators have already kickstarted a consultation .

U.S. operators have underperformed local rivals so far this year. Wynn Macau (1128.HK) and Sands China (1928.HK) have lost around half their value. MGM’s shares plunged by roughly two thirds over the same period.

Snow Lake’s dicey idea read more introduced new risks, and would have meant sacrificing the parent’s controlling stake or diluting minority investors. The stakes are getting higher for both sides.