Mr Chow and 10 others were taken away by Macao authorities on Saturday for investigation involving criminal syndicates in gambling halls, illegal gambling and money laundering, UBS said in a report. The market reacted negatively to Macau gaming stocks, but based on market expectations for the VIP lounge sector, it is estimated that the fundamental impact may be manageable.

According to the bank, market expectations for the Macau VIP lounge may be reduced. According to the Wenzhou police investigation, the group recruited Chinese mainland agents to promote cross-border gambling and online gambling. According to the police, as of July 2020, the group has 199 development shareholder-level agents, more than 12000 development gaming agents and 80000 households in the mainland.

According to UBS, expectations for a recovery in the VIP lounge in Macau have been low and gaming revenues in 2023 are expected to return to about 50 per cent of 2019 levels (total EBITDA is about 5-10 per cent). By contrast, the current annual gaming revenue operation rate in the VIP hall is about 20% of the 2019 level.

The bank believes that Macau gaming stocks have been sold off on Friday because of fears of a new variant of the virus Omicron, and will observe the changes in the epidemic. The bank expects the potential impact of Macao and Hong Kong's border with the mainland to be manageable because Macao and more recently Hong Kong have aligned their epidemic prevention policies with those of mainland China. Preparations for the relaxation of customs clearance between Hong Kong and the mainland appear to be continuing.