Inside Asian Gaming

inside asian gaming November 2014 26 NORWAY, QATAR: UMBRELLAS for a RAINY DAY In the second half of 2003, Beijing opened the floodgates leading to a gush of gambling-hungry mainland Chinese into Macau’s casinos. The equivalent in Norway or Qatar would have been striking that first rich and seemingly inexhaustible vein of oil or natural gas. When money flows in so easily, there’s a danger of becoming complacent and putting off planning for the future. In Qatar’s case, where gas reserves are forecast to last more than 200 years at current production levels, it’s a future we won’t live to see. But there are always unforeseen contingencies. Natural or man-made disasters, possibly, or a seismic shift in clean energy production. Interestingly, Qatar has made investment in renewable resources a major goal for the country over the next two decades. Both Norway and Qatar have set up sovereign wealth funds that collect surplus oil and gas revenues. Norway’s astutely managed SWF was founded in 1990 and has become the largest in the world, with reported assets of $890 billion at the end of June—that’s $178,000 for every Norwegian, all 5 million of them. And the fund holds about 1% of all stocks and bonds in the world. Qatar’s SWF, set up in 2005, is worth $170 billion. As of 2014, it has investments around the world in Valentino, Siemens, Printemps, Harrods, The Shard, Barclays Bank, Heathrow Airport, Paris Saint- Germain F.C., Volkswagen, Royal Dutch Shell, Bank of America, Tiffany, Agricultural Bank of China, Sainsbury’s, BlackBerry and Santander Brasil. But far from merely saving for rainy days, these funds are EVOLVING MACAU Norway’s oil-enriched sovereign wealth fund has become the largest in the world, with reported assets of $890 billion. Qatar, despite its massive natural gas reserves, has made investment in renewable resources a major goal over the next two decades. creating wealth and supporting diversification—Qatar’s investment in renewables technology being a notable example, seemingly ironic, but an eminently prudent hedge. Macau’s fiscal reserves are expected to reach 350 billion patacas (US$43.8 billion) by the end of this year. The International Monetary Fund suggests the government use that to set up a SWF in order to protect the city’s economy from future headwinds such as slowing gaming revenues, increased social spending arising from an aging population and structural reforms in mainland China. Anselmo Teng of the Macau Monetary Authority responded, “It’s one of the options.” But setting up a SWF has the potential to do a lot more than invest the reserves in different financial instruments. It could actually spur the diversification of the economy by helping to develop existing industries and potentially create new ones. Singapore’s SWF, The Government of Singapore Investment Corporation (GIC), founded in the 1970s, has assets of US$320 billion and offers a compelling model for Macau to follow—Singapore actually has two SWFs, the second, Temasek Holdings, is worth $177 billion. GIC is considered one of the world’s leading financial institutions, only employing the most exceptional candidates. Macau must certainly have its share of academically inclined young people who’d be in their element analyzing investments and structuring complex deals, but they’re lost in the hustle of the casino floor. A Macau SWF would give them a shot at pursuing careers in which they could thrive.