Hainan bets still bit of a long shotEditorial | Mary Ma Apr 17, 2018
The power of a market play based on government policies was again demonstrated. For example, Haikou-based HNA Infrastructure bucked the downward drag to conclude the day with its stock price soaring 9.5 percent.
Meanwhile, Macau gambling stocks slipped in tandem. Wynn Resorts and MGM Resorts International each fell 1.52 percent, while Las Vegas Sands Corp and Melco Resorts and Entertainment shed 0.76 and 0.87 percent, respectively.
Market reactions are often spontaneous and based on perceptions.
So these were yesterday's reflex reactions. But as investors read the announcement, they may discover that fears Macau would be directly hit by the free trade experiment planned for Hainan could be premature.
State media said President Xi Jinping announced the policy at a Friday conference after the Boao Forum. Had Xi done so during his Tuesday speech before government and economic leaders, the news would have been far more spectacular.
Perhaps it was because of this our local media gave it only moderate coverage - despite the mainland media frenzy.
According to the State Council guidelines that followed, sports lotteries and horse racing will be allowed on Hainan. Admittedly, it would have been much more headline-grabbing had the guidelines included casinos.
Although the green light for lotteries and horse racing is being read by some as a move that will open the door to Hainan eventually, that remains a far-fetched thought, at least at this stage. Until that happens, Macau and Hong Kong are safe.
It's unlikely for Beijing to do anything to harm Macau when the latter is due to review gaming licenses in two years. If Hainan is only allowed to introduce sports lotteries and horse racing in the end, that equilibrium is here to stay.
Perhaps it will provide an opportunity for the Hong Kong Jockey Club to export its expertise.
Hainan has gone through a peculiar course of development in the past three decades. When it was still part of Guangdong in the early 1980s, it was already accorded special economic privileges. However, when hived off from Guangdong to become a province of its own in 1988, it became the largest special economic zone by area. Local cadres then made great efforts to make it a paradise for tourism and real estate development.
But it hasn't been as successful as wished. Most of the millions of visitors basking in the sunshine on beaches in places like Sanya every year are from the mainland, who are affluent enough to flock to "China's Hawaii" to escape the dreadful winter cold in the north.
It's likely that following Xi's latest announcement, wealthy mainlanders will swarm there to snap up properties for speculation.
After three decades of trials, can leaders of the tropical paradise transform the slogans into reality?
It would be easier said than done.