More surveyed investors avoiding gambling sector: MS

October 14, 2022 Macau Earnings & Filings Industry Updates

There has been a 5-percentage point increase between 2021 and 2022, in the proportion of polled investors that exclude gambling stocks from their portfolio, according to banking group Morgan Stanley’s 2022 Global Investor Survey.

The tally across all categories among the 320 investors sampled in the Alphawise poll – institutional, retail and hedge funds – was that 29 percent steered clear of gaming in 2022, compared to 24 percent in 2021.

“We think the exclusions are applied mostly by European investors,” said Morgan Stanley, regarding the gaming sector.

“Gambling is the fourth most excluded sector among investors, ahead of military equipment and oil and gas,” added Wednesday’s memo.

Morgan Stanley added that exclusions were “mostly from long-only investors instead of hedge funds”.

The institution said that for 2022′s edition, 34 percent of the surveyed long-only investors had exclusions on the gambling sector, versus 26 percent in 2021, while only 13 percent of hedge funds had such exclusions, compared to 14 percent in 2021.

Investors subject to the European Union’s Sustainable Finance Disclosure Regulation (SFDR) are “likely” to find it more difficult to invest in gaming companies, Morgan Stanley suggested in its summary of survey results.

Share-trading volume for the Macau gaming companies, listed either in Hong Kong or the United States has been declining due to “delay” in easing of Covid-19 related travel restrictions applicable to the city, Morgan Stanley noted. The average daily trading volume of the Macau gaming names is now at “40 percent” of pre-Covid-19 level, it noted.

But it added: “We think valuation multiples for the group [Macau gaming companies] should still be largely driven by fundamentals: growth potential, earnings quality, and regulations.”

The research note also stated: “We expect investors to come back to these [Macau gaming] stocks in 2023 as we get clarity on gaming licences and Covid-related travel restrictions.”