Beijing's push to criminalize junkets that ferry mainlanders to gamble outside its borders has to be the last kind of clampdown that Macau wants. The ban comes as a double whammy for Macau's gaming industry.
Gaming stocks all suffered on reports that amendments to the nation's criminal law have been placed before the National People's Congress standing committee for scrutiny. Only someone with a gambling addiction would bet against the legislature giving the ban its assent.
Rather, the passage can be executed summarily as long as the leadership wants it.
Still, it's curious that Beijing has shown such a dismal sense of timing as it must know the ban would make Macau chief executive Ho Iat-seng's job more difficult: Ho is already having a difficult time balancing the books as things stand.
First, the pandemic has nearly killed Macau's tourism industry. Latest figures show there were 87 percent fewer arrivals - mainly involving, crucially, mainlanders - for the first four days of the National Day Golden Week holidays. Mainlanders, one must note, have traditionally been Macau's major source of revenue over the years.
If Ho had been proud to have been able to uphold the tradition of giving handouts in the form of cash checks to Macanese recently, he must also have been at pains to find a way to expand the former enclave's coffers.
It is no secret the present Beijing leadership dislikes gambling, and this is particularly true when political ideology takes precedence over all else. Still, Beijing could have chosen to hold back on the ban until Macau had been well on its way to a transformation by making its economy less addicted to gaming.
Could the action being taken now indicate Beijing is having a capital outflow problem that is more serious than feared?
The public security ministry reportedly estimated up to one trillion yuan (HK$1.15 trillion) flowed out of the mainland for gambling purposes each year, with its director-general for international cooperation, Liao Jinrong, quoted as warning that the currency hemorrhage was a threat to economic security.
However, that is nothing new under the sun.
The situation may still be tolerable if the economy is doing well generally. However, in the face of weak global demand for Chinese exports amid the pandemic and Beijing's showdown with the United States, can the economy really be doing all that well despite what "encouraging" official data is saying?
Gaming stocks - Melco, SJM, Sands, MGM, etc - regained some stability yesterday after a round of selloffs on Wednesday.
It's all but certain that the crackdown on junkets would spell a longer winter ahead for the gaming industry - even after the pandemic is brought under control and in the event that vaccines become available.
Their stocks will continue to come under pressure.
The pressure on Ho to step up the economic transformation is set to reach critical proportions. The former enclave's casinos had better step on the accelerator to upgrade business models.