China halves cash with­drawals in Ma­cau

Kuwait Times - - BUSINESS -

SHANG­HAI:

China is to halve the cash ma­chine limit for cer­tain card­hold­ers vis­it­ing the gam­bling en­clave of Ma­cau, in its lat­est effort to curb mas­sive capital out­flows caused by the fall­ing yuan, Hong Kong me­dia re­ported yes­ter­day. From to­day, pun­ters us­ing the UnionPay sys­tem - around half of those vis­it­ing the city from the main­land - will only be able to get 5,000 pat­a­cas (around $600) from ATMs ev­ery day, the South China Morn­ing Post re­ported.

The news sent casino stocks plung­ing, with Sands China down 4.93 per­cent in Hong Kong, Wynn Ma­cau 5.82 per­cent lower and Gal­axy Entertainment also los­ing 4.25 per­cent by the mid­day break. AFP was un­able to con­firm the re­port and the Mon­e­tary Au­thor­ity of Ma­cao did not re­spond to re­quests for com­ment. UnionPay In­ter­na­tional said in a state­ment to AFP that its over­seas cash with­drawal poli­cies “re­main the same” - 10,000 yuan per day with an an­nual cap of 100,000 yuan ($14,500) - but added it com­plies with reg­u­la­tions and laws is­sued by rel­e­vant au­thor­i­ties.

The move, if it hap­pens, ap­pears to be the lat­est at­tempt by Chi­nese au­thor­i­ties to stem a grow­ing tide of capital flow­ing out of China as lo­cals seek safer in­vest­ments abroad. Capital flight is es­ti­mated by Bloomberg to have reached $1 tril­lion in 2015 and has continued dur­ing 2016, de­spite re­cent ef­forts by Bei­jing to tighten re­stric­tions on cur­rency flows. DS Kim, an an­a­lyst at JPMor­gan Chase & Co. in Hong Kong, de­scribed the move as “send­ing a mes­sage to safe­guard against po­ten­tial capital out­flow abuses, amidst the continued de­cline in China’s for­eign ex­change re­serves”, Bloomberg re­ported.

China’s for­eign ex­change re­serves, the world’s largest hard-cur­rency stock­pile, dropped for the fifth-straight month in Novem­ber to $3.05 tril­lion, prompt­ing au­thor­i­ties to step up con­trol on capital flight. Bei­jing had ear­lier this week warned against “ir­ra­tional” over­seas ac­qui­si­tions as more do­mes­tic funds were be­ing spent over­seas with Chi­nese com­pany’s in­creas­ing shop­ping spree on for­eign as­set. It also in­di­cated it could re­lax re­stric­tions on for­eign in­vest­ment in some sec­tors.

An­a­lysts pre­dicted the lat­est move would im­pact the city’s gam­ing rev­enues. “Union Pay is the main­land banks’ credit card sys­tem, equiv­a­lent to Visa and Master­card,” Fran­cis Lun of Hong Kong-based GEO Se­cu­ri­ties told AFP. “By shut­ting that off, that will re­ally close the tab on the in­sur­ance in­dus­try and the gam­ing in­dus­try.” China’s State Ad­min­is­tra­tion of For­eign Ex­change Re­serve had al­ready capped the amount of money UnionPay card­hold­ers could spend over­seas on in­sur­ance prod­ucts ear­lier this year as wealthy Chi­nese have been buy­ing up in­sur­ance poli­cies in Hong Kong us­ing credit cards. — AFP

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