You are using an older browser version. Please use a supported version for the best MSN experience.

Packer's Crown rocked by China detentions

AAP logoAAP 16/10/2016 Trevor Chappell

The fate of 18 Crown Resorts employees detained in China remains unclear as investor reaction to raids by Chinese authorities wiped $630 million from the value of billionaire James Packer's controlling stake in the casino company.

Shares in Crown plunged $1.80, or 13.9 per cent, to $11.15 on Monday, wiping more than $1.3 billion off Crown's market value. Mr Packer, who holds a stake of 48.2 per cent in Crown, saw the value of his stake plunge by $631.8 million to $3.9 billion.

Crown said on Monday that it has not been given any details about why its employees have been detained in China and had not been able to speak with them.

The Chinese Foreign Ministry said that some Australians had been detained for suspected gambling crimes and the case was still being investigated, according to a Reuters report.

The casino giant believes that Jason O'Connor, its VIP International executive vice-president, is among the 18 employees being held.

Australia's Department of Foreign Affairs and Trade was awaiting official confirmation of the detentions, saying it was aware of reports of the possible detention of some Crown employees, including three Australians, across China overnight on 13-14 October.

DFAT said Chinese authorities have three days to notify of the detention of Australians under a bilateral consular treaty.

Investors fear that the detention of the Crown employees may indicate that the Chinese government is about to get tougher on gambling in Macau, where Crown operates three casinos under the joint venture Melco Crown Entertainment.

Investors also fear that a tougher approach to gambling by China might inhibit the flow of VIP Chinese gamblers visiting casinos in Australia.

In recent years, the Chinese government has cracked down on corruption, which has resulted in a plunge in revenues at casinos in Macau.

IG market strategist Evan Lucas said the news of the detention of the Crown employees in China was bad for Crown.

"There is a suggestion that the Chinese are gearing up to increase regulation even harder on gambling in general," Mr Lucas said.

"That is what the market is probably reacting to."

Mr Lucas said expansion in Asia was a big part of Crown's strategy and a crackdown on gambling in Macau could inhibit that strategy.

Mr Packer is planning to split Crown's domestic and international operations, and Mr Lucas said those plans could now be ramped up.

"He (Mr Packer) now probably needs to ring-fence his Australian assets," Mr Lucas said.

CMC Markets chief market strategist Michael McCarthy said the impact of the detentions on casino operations in Australia was not yet clear.

"But given that it appears to be the VIP sales manager (of Crown) who's been targeted, (the detentions) could be about selling gambling services in Australia to Chinese gamblers," Mr McCarthy said.

"The market appears to be concluding that it will have an impact on all Australian casino operations."

Shares in another casinos operator, The Star Entertainment Group, also fell sharply on Monday, dropping 3.7 per cent to $5.52.

The Star, which operates casinos in Sydney, Brisbane and the Gold Coast, has no casinos in Macau but, like Crown, markets extensively in China to draw Chinese VIP gamblers and tourists to its Australian properties.

image beaconimage beaconimage beacon