ANALYSIS-S'pore casinos target high-rollers, may hurt Macau 27 May 2009 16:14

Singapore's tax on high-rollers much lower than Macau's

* Impact on Malaysia's Genting Highlands will be temporary

* Singaporeans may travel to Genting because of entry fee

(Repeats to include link to gaming package)

By Candida Ng and Kevin Lim

SINGAPORE, May 27 (Reuters) - Singapore's two upcoming casinos may draw some business from neighbouring Malaysia's Genting Highlands but the city-state's focus on high-rollers will likely have a greater impact on Macau and Australia.

When up and running next year, Sheldon Adelson's Marina Bay Sands and the Malaysian Genting group's <GENT.KL> Resorts World at Sentosa will pay an effective tax of around 12 percent on net revenue from high-rollers -- compared with 39 percent for Macau -- giving operators more incentive to draw such people to the city-state.

Macau, which has 31 casinos, derives more than 60 percent of casino revenue from wealthy gamblers. Australia's larger casinos, such as Melbourne's Crown and Perth's Burswood, derive about 20 percent from VIP customers and have a large Asian clientele.

"Potentially in the VIP -- or higher-end, more premium player segment -- Singapore could have a competitive impact," said Danny Goldberg, an analyst at Select Equities in Sydney.

Companies with casinos in Macau include Melco Crown <MPEL.O>, which is part owned by Australia's Crown Ltd <CWN.AX>, Macau gaming mogul Stanley Ho's SJM Holdings <0880.HK>, U.S.-based Las Vegas Sands <LVS.N> and Wynn Resorts <WYNN.O>, and Hong Kong's Galaxy Entertainment Group <0027.HK>.

Crown owns the Crown and Burswood casinos in Australia.

Australia's effective tax rate -- a combination of gaming and sales taxes -- is between 8 and 15 percent for high-rollers, depending on where the casino is located, but the country loses out to Singapore by being further away from East Asia.

Edward Ong, a Malaysia-based analyst with Macquarie Research, estimated that high-rollers constitute a $10 billion-a-year market for Asian casinos in revenue terms. Singapore can easily capture 5 to 10 percent of the region's VIP market, he added.

Singapore legalised casino gaming in 2005 as part of an ambitious plan to make it a more exciting tourism destination and double annual visitor arrivals to 17 million by 2015.

The first casino, Las Vegas Sands' Marina Bay Sands, is due to open at the end of this year, while Genting's <GNTG.SI> Resorts World at Sentosa will be ready by mid-2010.

To encourage casino operators to focus on big-time gamblers, the city-state will impose a lower tax of 5 percent on net revenue from high-rollers compared with 15 percent for the mass market. The Singapore casinos also have to pay a 7 percent goods and services tax on net revenue from casino gaming.

Resorts World will also host Southeast Asia's first Universal Studios, while the casinos will have restaurants helmed by celebrity chefs such as Charlie Trotter and Tetsuya Wakuda to appeal to well-heeled tourists as well as gamblers.

For a package of stories on casinos, click [ID:nHKG213363]

UNTAPPED DEMAND

On competition with Malaysia, analysts said the impact on Genting Highlands will be minimal since it does not focus on high-rollers and depends on locals for more than 70 percent of its business. Singaporean visitors account for about 20 percent of the clientele at Genting Highlands, which is owned by Genting.

"You're not going to see Malaysians, who generally go out on a day trip to gamble, go over to Singapore to do the same thing," said Malaysia's RHB, although it added the city-state may attract people initially with the novelty of visiting a new casino.

Singapore's plan to impose a S$100 daily ($69) entry fee on citizens visiting local casinos will push some residents to journey to Genting. However, a Malaysian ban on its Muslim citizens entering Genting casino will drive some to Singapore.

Jonathan Galaviz, a partner at Las Vegas-based consultancy Globalysis, said overall Singapore's upcoming casinos will help grow Asia's gaming market rather than cannabalise it.

"There continues to be a massive undersupply of casino entertainment options in Asia and it will be a very long time before the full demand is met," he said. ($1=1.445 Singapore Dollar) (Editing by Lincoln Feast)

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TOPWRAP 7-US shows signs of weakness; euro zone improves 22 May 2009 05:47

* U.S. jobless claims hit record, manufacturing contracts

* S&P downgrades Britain's outlook, AAA rating at risk

* Fears of U.S. ratings cut weigh on stocks, bonds, dollar

* Euro zone PMIs show slowing contraction

* Geithner says U.S. regulatory reforms coming soon

(For full financial crisis coverage, click [nCRISIS])

By Caroline Valetkevitch

NEW YORK, May 21 (Reuters) - Data from the United States on jobless claims and business conditions on Thursday dented hopes of a quick economic rebound but euro zone countries showed that the worst recession in six decades may be easing.

In Britain, prospects were clouded by a warning over government debt and political uncertainty as Standard & Poor's lowered its outlook to "negative" and said it might cut the country's precious triple-A credit rating. [nLL627240]

"This is a reality check for the UK government," said Kenneth Broux, an economist at Lloyds TSB Corporate Markets.

Worries the United States may suffer a cut to its triple-A rating pushed down stocks, bonds and the dollar.

Investors fear the United States is "going the way of the UK," Bill Gross, co-chief investment officer at bond giant Pacific Investment Management, told Reuters. [nN21294698]

All three major U.S. stock indexes [.N] closed down more than 1.5 percent, while European shares <.FTEU3> fell 2.1 percent, breaking five straight sessions of gains. [MKTS/GLOB]

The benchmark 10-year U.S. Treasury note <US10YT=RR> eased and the dollar dropped to its lowest level this year against major currencies <.DXY>.

"No one wants to admit it but there might be investors nervous enough with the extreme levels of indebtedness of the U.S. government so that just the thought of a downgrade would provide an excuse to sell dollars," said Matt Esteve, a trader at Tempus Consulting in Washington.

CHINESE RISKS, U.S. WEAKNESS

Chinese officials highlighted the risks facing the world's third-largest economy -- one of the few still growing.

Vice Premier Li Keqiang said while the government's $585 billion stimulus plan had yielded initial results, it was too early to hail an economic recovery. [nPEK13801]

"The international financial crisis is still spreading and its impact on the real economy is deepening," the official Xinhua news agency quoted Li as saying.

Jobless claims in the United States, the world's biggest economy and epicenter of the global crisis, rose to a record last week while new claims fell by 12,000. [nN21256165]

Other data showed manufacturing in the U.S. Mid-Atlantic area shrank in May for the eighth straight month.

Treasury Secretary Timothy Geithner said the U.S. financial system was steadying from the taxpayer-funded bailout of banks but that care must be taken to ensure normal market forces are allowed to work. [nN21365767]

Broad regulatory reforms should be unveiled in a few weeks, including protection for consumers, Geithner said, as the Obama administration faces the task of "striking the delicate balance between intervention and allowing market participants latitude to operate."

The Conference Board research firm suggested more promise for U.S. growth, with its index of leading indicators for April showing the first rise since June 2008.

In that vein, the Congressional Budget Office said the U.S. economy will likely start growing again in the second half of 2009 but that the jobless rate could peak at more than 10 percent against the current 8.9 percent.

The new reports came a day after the Federal Reserve, in minutes released from its April policy meeting, cut its outlook for U.S. growth over the next three years and said a full recovery could take five or six years.

EUROPE OFFERS PROMISE

Still, the euro zone offered some grounds for cautious optimism.

Markit's Eurozone Flash Services Purchasing Managers Index, a measure of service and manufacturing activity, rose to 44.7 in May from 43.8 last month, beating the consensus estimate.

May was the third month in a row the index picked up and took it to its highest level since October. [nLAG003446]

The PMI index showed France's economy performing more strongly than the euro zone as a whole. Markit said a recovery in France could be earlier than current forecasts of a rebound in the fourth quarter. [nLK37204]

The rate of decline in the private sector in Germany, Europe's largest economy, was its slowest in seven months.

Predictions by some economists of a return to growth as early as the last quarter of this year are tempered with concerns that data may yet obscure more complex underlying weaknesses in the economy.

"It is grounds for hope that things will improve over the next few months," said Peter Dixon, an economist at Commerzbank. "I'm not getting carried away."

Elsewhere, the outlook was mixed.

South Africa, Africa's biggest economy, "faces a sharp cyclical downturn" after a prolonged boom, said Treasury Director-General Lesetja Kganyago, with the government having to manage borrowing carefully to avoid overburdening the country with debt. [nLL944902]

Argentina's economy, Latin America's third biggest, grew a better-than-expected 2.7 percent in March from a year earlier, the government said, but many analysts say official data is downplaying the slowdown. [nN21302995]

Singapore's economy shrank 14.6 percent in the first quarter at an annualized and seasonally adjusted rate, less than forecast, prompting the trade ministry to talk of signs the country's worst recession is bottoming out. [nSP404487]

The small Southeast Asian state, a proxy for global trends due to its heavy exposure to international trade, saw its exports slip back in April after two months of growth, reinforcing a view that there is no clear recovery.

Singapore's April exports to the United States and Europe shrank by more than 30 percent and to China by 15 percent. (Reporting by Reuters correspondents worldwide; Editing by John O'Callaghan)

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GRAPHIC-Inventory restocking boosts Asia stock markets, for now 14 May 2009 18:14

By Eric Burroughs and Kevin Plumberg

HONG KONG, May 14 (Reuters) - Asian producers of everything from LCD TVs to notebooks have suddenly been caught short of inventory and have had to ramp up production, a turnaround that has powered a rally in regional stocks to a seven-month peak.

China's nearly $600 billion of stimulus spending has proved a timely boon to hard-hit Asian factories, particularly those making hi-tech goods, but it may not last unless consumers in major economies start spending more on a sustained basis.

The unexpected drop in U.S. retail sales last month showed how households are still suffering blows from heavy layoffs, falling house prices and banks tightening how much credit they extend to households.

Some analysts believe the 45 percent stock rally since early March has run too far too quickly, and investors may be disappointed at the slow pace of economic recovery that could force manufacturers to cut back on output later in the year.

Below are graphics explaining the inventory restocking trend and how it is taking shape. Click on the URL to see the charts.

For a related analysis, click on [ID:nHKG167204]

SOUTH KOREA SHIPMENTS TURN AROUND

http://graphics.thomsonreuters.com/059/KR_INVT0509.jpg

South Korea is one of the most highly leveraged Asian economies to China's growth. Plunging Korean exports to China slowed at the beginning of 2009 and have been improving ever since.

The Korean inventories-to-shipments ratio, which reached a seven-year high in November 2008 when they scrambled to start slashing inventories, appears to have bottomed in February when restocking began.

South Korea's LG Display <034220.KS> said last month TV panel demand has stayed strong and led to a shortage that will continue until the end of June, adding that it was cautiously hopeful. But world No. 1 LCD panel maker, Samsung Electronics <005930.KS>, said it was premature to expect a near-term recovery in the global economy and consumer demand.

KOREA LEADS WAY, BOOSTS MSCI ASIA EX-JAPAN

http://graphics.thomsonreuters.com/059/MKT_KRSTX0509.jpg

South Korea has thus led the way in the inventory restocking, which has also been seen in the sharp recovery in export growth and industrial production.

On a three-month basis, Korean production surged in April to post the biggest such percentage change since the mid-1980s after having suffered the biggest such contraction since the early 1908s in December.

That sharp bounce back has coincided almost exactly with the turnaround in the benchmark MSCI Asia-Pacific ex-Japan index <.MIAPJ0000PUS>, which has been driven by tech and consumer discretionary shares.

ISM NEW ORDERS AND CHINESE EXPORTS

http://graphics.thomsonreuters.com/059/MKT_ISM0509.jpg

While some economists were disappointed in that Chinese exports fell at a slightly faster pace in April compared with March, there are reasons to expect that pace to slow in coming months.

One of the most closely followed leading indicators -- the new orders index from the Institute for Supply Management's monthly U.S. manufacturing survey -- has surprised by snapping back to near the 50 growth/contraction dividing line from the record low hit in December for the 61-year-old survey.

The jump in the ISM new orders is one factor driving the optimism about the global growth accelerating later in the year.

The ISM new orders index also has a very close link with Chinese export growth. When looking at the ISM index's correlation with Chinese export growth, it tends to lead changes in the Chinese data by about four months -- suggesting that Chinese exports should start to look better from May onward.

ALL ABOUT CONSUMER SPENDING

http://graphics.thomsonreuters.com/059/MKT_G3SPND0509.jpg

Whether the turn in the inventory cycle and rally in stocks have legs depends almost entirely on consumer demand from the United States and other major economies.

The hope is that layoffs will slow and government stimulus will kick in to spur spending. But that remains a big if. So far, on a annual three-month basis, consumer spending is still shrinking in the United States, euro zone and Japan. Wednesday's U.S. retail sales data shows the contraction is still the sharpest on record.

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