Why Genting SP should not pin too much hope on Japan?

Why Genting SP should not pin too much hope on Japan?

Background

Japan economy has remained stagnant for 30 years. To revive its economy, there has been a suggestion for the government allow casinos being built in the country for the past 10 years. Despite the tempting and obvious economic benefits from building casinos, Japan parliament was reluctant to accept the industry for the fear of social and cultures problems that come with it. It was clear that Japan is not going to have any gambling dens until PM Abe swore to bring the nation back to its glorious past. Abe presented his vision of having 4 dens in the country and that is when the market starts speculating on potential business opportunity for Genting Singapore.

While there are some analysts like Motely Fools which tells you how competitors from nearby Macau will limit profitability of potential casinos in Japan, this write up of mine tells you why Genting Japan is just another dream of the dreamers.

Reasons:

1. 1.       This Sept is the last chance for Abe to push for legalisation of casino. If it fails, Pro Casinos groups have to wait for next year to bring up the bill again. Given that the parliament has rejected the bill in all previous sessions held this year, it is hard to see why the parliament would change its stance this Sept. Thus at least there is a low chance to see any casino bill being passed in 2014.
2. 2.       Japanese are people with strong cultures and value. Japan once adopted closed door policy to all foreigners until the west threaten to pull down their doors with cannons. Japanese culture of determination (some described it as stubbornness) is still evident when we look at their mind blogging farming industry which produces the similar agriculture products with the world most expensive farmers and lands. Going by the same logic, we can deduce that the Japanese won’t easily succumb to economic pressures.
3. 3.       As mentioned, the topic of casino is reopened for discussion only as a last resort to end Japan’s 30 years of economic woes. However the new economic policy, or what they called Abenomic, is starting to show some result in lifting the economy with a growth of 1.6% last quarter. This would satisfy the opponents that no casino is actually needed to lift the economy.

·         http://www.tradingeconomics.com/japan/gdp-growth

·         http://www.reuters.com/article/2014/08/02/us-brazil-japan-idUSKBN0G200O20140802

1. 4.       Poll shown that PM Abe, the main proponent of Casino bill, is losing his charm.

·         http://www.ecns.cn/voices/2014/07-17/124580.shtml

• 5.       By looking at the chart, we can also see that the market as a whole is of the opinion that casino opportunity in Japan is unlikely to materialize. Discounting away the excitement when the plan was first announced, we see that Genting SP price remained rather stable throughout 2014 and near 2013 price level when Genting had yet to express it’s interest

The above 5 reasons should at least mean casino in Japan is highly unlikely for the next 3-5 years or at least until Japanese politicians are at their wits end again.