INSIDE ASIAN GAMING | November 2013 4 Inside Asian Gaming is published by Must Read Publications Ltd 5A FIT Center Avenida Comercial de Macau Macau Tel: (853) 8294 6755 For subscription enquiries, please email
[email protected] For advertising enquiries, please email
[email protected] or call: (853) 6680 9419 www.asgam.com Inside Asian Gaming is an official media partner of: www.gamingstandards.com Publisher Kareem Jalal Director João Costeira Varela Editor James Rutherford Operations Manager Cheryl Kuok Contributors John Grochowski, Charles Anderer James J. Hodl, Richard Meyer Graphic Designer Rui Gomes Photography Ike, Gary Wong, James Leong, Wong Kei Cheong James Rutherford We crave your feedback. Please email your comments to
[email protected] EDITORIAL Wealth: It’s Complicated W e read so much about it that few of us would be surprised to know just howmuch the wealthy of East Asia have flourished, both in numbers and means, in the years since the onset of what we are told has been a global recession. Since 2007, the region’s population of high net worth individuals has soared 31%, their wealth by 27%, well above those averages for their peers elsewhere on the planet. This is according to the“2013WorldWealth Report”compiled by Paris-based business consultants and wealth managers Capgemini in partnership with Royal Bank of Canada. The region’s HNWIs as they define it—investable assets of US$1 million or more, excluding primary residences, collectibles and personal possessions—numbered more than 3.6 million in 2012, their collective wealth estimated at $12 trillion. This was just under North America’s $12.7 trillion. But Asia-Pacific HNWIs are getting richer at a faster rate. They were No. 1 in 2011 and the report expects they’ll reclaim that spot in 2014. By 2015, their wealth is forecast to hit $15.9 trillion. Let’s attempt to put that in perspective. It’s 130% of the gross domestic product of China as calculated by the World Bank in terms of purchasing power, four times the GDP of Russia, almost seven times that of the United Kingdom. It’s enough to pay off all the money the United States owes the world’s investors—individuals, corporations, the Federal Reserve System and state, local and foreign governments—with $3 trillion and change left over. OK, so much for perspective. It’s a symbolic number, then, nothing more, and certainly it’s nothing less, as we look on in awe at the explosive growth Macau’s casino market has enjoyed over the last decade. What’s that been all about if not rising Asia’s rising wealthy? Steve Wynn was in a particularly quotable mood even for him as he mused on this during Wynn Resorts’ most recent conference call, when he professed himself “flabbergasted” that the Massachusetts Gaming Commission would find Caesars Entertainment and its $23 billion in debt less than desirable as investment prospects for their state. “You know that we are primarily an Asian company, thank goodness, and God bless that,” he said. One can only wonder what God had to do with it. More to his point, though, as he testified last month at a public hearing before those same regulators in Boston (Wynn wants to build a casino in the suburb of Everett): “There is no old money in China. It’s all 40 years old or less. And they tell me that there’s a millionaire created in modern China every minute and a half. I believe it.” There are a lot of them, no doubt about that: slightly more than 1 million, according to a 2013 report co-produced by the research arm of Shanghai’s popular Hurun Report . It works out to a millionaire for every 1,300 people. Capgemini’s criteria make it a much smaller 643,000, but even their math shows a whopping rate of growth of 55% since 2007. And of course it’s been greatly to Macau’s advantage and Wynn’s that a fair number of them live just over the border in Guangdong, 172,000 by Hurun ’s count, China’s second-largest contingent of millionaires by province. But it’s been Thailand, a country we don’t associate with casinos, that has led the region by rate of growth. Capgemini’s count has the country at 73,000 millionaires, 66% more than in 2007. Indonesia’s grew by 58% to 38,000 over the same period. It’s interesting to ponder what might happen if either of these countries legalized gaming. Or what if South Korea, home to a millionaire for every 312 people, allowed its domestic casino market to expand beyond the remote coal fields of Gangwon Province? In Japan, where the ratio is 1:67, the political will does appear to exist for this. HNWIs by investable wealth number more than 1.9 million in Japan, the most in Asia, and analysts believe two resort-scale casinos, one each in Tokyo and Osaka, could generate US$10 billion in gaming revenue out of the gate. Seemingly overnight, we’d be looking at the second-largest market in the world. But then we could look at how quickly Singapore’s revenues have leveled off, a domestic market of 5.3 million with 101,000 Capgemini millionaires, one for every 52 residents, and make a plausible case for HNWI concentration having very little to do with it. It’s tourism that will make the Tokyo market a success. As it has in Singapore. That and the indispensable contributions of all the people who aren’t millionaires. For Chinese HNWIs Macau actually ranks rather low among preferred domestic destinations, trailing Sanya, Hong Kong, Yunnan, Tibet, Hangzhou and Xinjiang, according to the 2013 edition of Hurun ’s “The Chinese Luxury Traveler,” and it’s the only one of the seven that has declined in popularity from last year. Not that Macau has anything to worry about from the rich. Not as long as the masses keep coming. There are so many more of them.