China halves cash withdrawals in Macau
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