Anyone thinking of going long in Macau gaming stocks might like to consider the fact most of the casinos in the world’s highest grossing gaming jurisdiction are only five metres above sea level. And the sea is very close.
This might not be the wisest investment strategy yet devised in a world where the oceans are widely predicted to get higher and rougher due to global warming.
Our ancestors generally liked to build their settlements high up in hills, etc., so they could see trouble coming. Modern humans, in their wisdom, decided that with the decline of general lawlessness heralded by the rise of the nation state, they could jolly well build anything, anywhere they fancied and build it high enough to give a sense of space. Thus was born the era of the ‘panoramic sea view’ beloved by property developers and real estate agents everywhere.
Yet all those beautifully-appointed hotel rooms and casino floors lovingly conceived and assembled in Macau by the finest financial and business minds known to the contemporary world are only a stone’s throw from the Pearl River Delta. The latter is a sort of watery, muddy anteroom to the open waves of the South China Sea. Cotai, where most of the overseas investment is located, rose from the waves little more than five years ago as a result of a massive landfill project. Its name comes from a conflation of the names of what were Macau’s two outlying islands, Coloane and Taipa, which ‘Co-Tai’ has now effectively turned into one big island.
Singapore, which will play host to two new casino resorts next year, isn’t much better off than Macau in the sea level department, being surrounded by water and no more than 15 metres above the ocean at any point (excluding office towers)
The vulnerability of Macau and Singapore to possible flooding caused by a rise in sea level and/or violent storms was brought into focus last week when the World Wildlife Fund published a report on 11 Asian cities. It said they were all under varying degrees of threat from rising oceans. The latter is blamed by many scientists on global warming caused by human pollution. Macau wasn’t on the list, probably because it didn’t cross the ‘multi-millionaire’ threshold (in terms of population) used by the WWF. Singapore and Hong Kong were both on the ‘at risk’ list, though the WWF said that these two cities’ “wealth and strong governance” made them better able to face the challenge posed by the elements.
Macau is certainly like Singapore and Hong Kong in being above the regional average in terms of jurisdictional wealth. Macau had a budget surplus of MOP29 billion (USD3.6 billion) in 2008, though it has embarked on a public spending spree in 2009 as part of an economic stimulus package to see the city through the regional downturn. There are, however, still some question marks about the quality of Macau’s strategic planning, including its ability to think really long term about how to protect its massive infrastructure investments from any environmental changes.
Before any of the Las Vegas operators that held off bidding for Macau licences start chuckling too loudly, it’s worth mentioning that the sea of sand that surrounds the Nevada gambling destination could itself one day be on the rise. That could happen if the aquifer and reservoir system is put under much more strain by suburban sprawl and the accompanying surge in demand for water in pools, Jacuzzis and on grass lawns.
So ‘ya boo sucks’.
