Charlotte Street Partners



All money on red

Written by Charlie Clegg, senior associate 
Edited by David Gaffney, partner
29 November 2021

Good morning,

China has two “special administrative regions”: Hong Kong and Macau. The Chinese government’s recent attempts to tighten its grip on Hong Kong sparked high-profile protests. Beijing is also exerting control in Macau, yet the response is playing out very differently. Macau is about the size of the Hebridean island of Eigg, but accommodates 700,000 permanent residents and, pre-pandemic, 39 million annual visitors. Once a quiet port under Portuguese control, from the mid-1960s Lisbon began to cede control to Beijing. The island joined China as a special administrative region in 1999 and, seven years later, overtook Las Vegas to become the world’s largest gambling centre. Gambling has helped the residents become, per head, some of the wealthiest in the world. However, inequality is extreme. At $9bn, Macau’s gambling revenues in the last quarter of 2019 were more than five times those of Las Vegas. By the third quarter of 2021, factors including Covid had seen Macau’s gambling revenue drop to £2.5bn relative to £2.1bn for ‘Sin City’. This is a big blow to a territory for which 70-80% of its GDP is based on gambling. Property prices have been stagnant. Now a Chinese government crackdown could further jeopardise the territory’s recovery. In September, Macau’s pro-Beijing government announced plans which would make the payment of dividends by the local and US-listed casino groups subject to Macau government approval. Some Macau casinos fear Beijing will also enforce the use of traceable digital currency in casinos. The crackdown appears to be, in large part, a reaction to criminal activity which has caused an outflow of the yuan via Macau. On Saturday, Macau authorities questioned Alvin Chau, who organises trips to Macau for big-spending gamblers. Yesterday, police announced the arrests of 11 people as part of an investigation into illegal gambling and money laundering. In another part, though, the crackdown is political. At the Chinese Communist Party’s 100th anniversary in July, President Xi vowed to exercise full governance over Hong Kong and Macau. Taking on its gambling sector is a clear statement of intent. Some of Macau’s casinos are already diversifying to a more “experiential” form of tourism. Such holidays are increasingly favoured by the mainland Chinese tourists who, pre-pandemic, made up 90% of Macau’s visitors. Despite this adaptability, Macau’s economic future seems uncertain. Though little affected by the kinds of protests seen in Hong Kong, Macau too is being drawn closer to Beijing.


As G7 health ministers gather to discuss responses to the omicron variant of coronavirus, the UK’s senior advisory body on vaccines, the Joint Council on Vaccines and Immunity, is today expected to publish recommendations on the further roll-out of the booster vaccine scheme. This is expected to include advice on booster vaccines for under-40s. A 14-year-old boy is due to appear in court today, charged with the murder of 12-year-old Ava White. White was fatally assaulted in Liverpool city centre on Thursday. Three other boys have been arrested and conditionally bailed. The head of Bosnia-Herzegovina’s Serb ethnic community has defended plans to withdraw Serb areas from national institutions. Milorad Dodik claimed he would soon be speaking with President Putin of Russia and was confident Russian and Chinese support would sustain Bosnia-Herzegovina’s Serbs were the west to impose sanctions.

Business and economy

Research by business services provider DWF has found two-in-five businesses are struggling to recruit employees due to a perception of their ESG credentials as being weak. The report also found 61% of firms are losing out on business due to poor ESG credentials. Some 40% of UK manufacturing businesses have engaged restructuring or insolvency professionals or are considering doing so, according to a new report. The statistics, part of a study for Make UK, also found half of businesses surveyed agreed a 20% rise in costs would be “catastrophic”. US private equity group Blackstone is gearing up to sell iconic UK holiday camp chain Butlins. Blackstone acquired Butlins’ parent company Bourne Leisure only last year. Butlins has benefitted from a rise in UK staycations during the Covid-19 pandemic.

Columns of note

As Turkey is expected to reach 20% annual inflation this week, the Financial Times looks at a crisis which, it claims, is of President Erdogan’s making. The replacement in March of central bank head Naci Agbal with Erdogan loyalist Sahap Kavcioglu precipitated massive rises in inflation. Capital has flooded Turkey as the state refuses to raise interest rates. Now Erdogan’s own popularity is suffering as soaring prices eat into living standards. (£) New legislation under consideration at Westminster could massively shake-up music copyright laws and the way deals are done between artists and labels. In The Times’ Thunderer column, former EMI Music UK chief executive Tony Wadsworth argues these changes will undermine the tentative recovery of the UK’s music industry by making it an unappealing place to invest in new talent. (£)


What’s happening this week?

On Friday, Turkey’s annual inflation rate is expected to reach 20% despite the country’s central bank’s cut in the interest rate for the third month in a row to 15%. The Eurozone will also publish inflation statistics. These are expected to show the highest rises in 30 years, matching a recent similar record in the US. On Friday, the US will publish jobs statistics, which come amidst increasing speculation about the US Federal Reserve’s plans for interest rates.

What’s happening today?

Kkv Sec Loan
Brown Advisory
Tr Euro.growth
Grit Real Est.
Mysale Group
Brand Architek.

Final results
Benchmark Hlds

Interim results
Molten VenturesAmigoEckoh Technologies   

International economic announcements
(10:00) Economic Sentiment Indicator (EU)(15:00) Pending Homes Sales (US)(10:00) Consumer Confidence (EU)(10:00) Industrial Confidence (EU)(10:00) Services Sentiment (EU)(10:00) Business Climate Indicator (EU)

UK economic announcements
(09:30) Consumer Credit(09:30) Mortgage Approvals

did you know

France eats more Nutella than any other country, with around 75,000 tonnes of the chocolate and hazelnut spread consumed there every year.

Parliamentary highlights

House of Commons

Oral questionsDepartment for Levelling Up, Housing and Communities LegislationSecond Reading: Leasehold Reform (Ground Rent) [HL] MotionMotion to approve a Ways and Means Resolution relating to the Animals (Penalty Notices) Bill

Scottish parliament 

No business scheduled.

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