Financial life in a big town

The Reserve Bank of India told lenders to set aside more deposits as reserves than economists predicted after raising its growth and inflation forecasts. Stocks and bonds fell.

Governor Duvvuri Subbarao increased the cash reserve ratio to 5.75 percent from 5 percent, exceeding the median forecast for a half-point move in a Bloomberg News survey, an RBI statement showed in Mumbai today. The bank kept benchmark interest rates unchanged.

The decision is India’s biggest step yet toward raising borrowing costs as inflation and asset-bubble concerns reverberate across Asia. China, Malaysia and the Philippines moved closer toward raising rates this month and Australia and Vietnam have already done so, spurring a sell-off in stocks and bolstering the outlook for currency gains in the region.

“The policy is indicating a sequential step towards monetary tightening in India,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “The bank may raise policy rates before the next scheduled meeting,” on April 20.

India’s benchmark stock index extended its drop, bond yields rose and the rupee weakened after the report. The Sensitive stock index fell 1.2 percent to 16,105.75, while the yield on 10-year government bonds increased to 7.59 percent from 7.55 percent at 11:20 p.m. in Mumbai. The rupee weakened to 46.39 against the dollar from 46.36 before the report.

Gaining Momentum

Governor Duvvuri Subbarao said India’s economic growth could “gain momentum” over the next year and “reinforce” inflationary pressures. The central bank raised its inflation forecast to 8.5 percent by March 31 from 6.5 percent.

“The message being sent across is that stern steps will be taken going forward to contain inflation,” said Killol Pandya, who oversees the equivalent of $152 million in Indian debt at Shinsei Asset Management India Pvt. in Mumbai. “There are indications the economy is turning around.”

In China, the central bank ordered some banks to pare lending, raised the ratio for deposits banks must set aside as reserves and guided bill yields higher this month after loan growth surged.

Malaysia kept borrowing costs unchanged on Jan. 26, while warning that rates cannot be kept “too low” for too long because of the need to prevent a build-up of “financial imbalances.” The Philippines increased its so-called rediscounting rate, one of the interest rates it charges lenders for borrowing money from the central bank, as it began unwinding stimulus measures.

Equities Retreat

Equities have retreated on concern that the withdrawal of stimulus measures will slow a rebound in corporate earnings. The MSCI Asia Pacific index has lost 7.3 percent in the past two weeks.

Analysts anticipate currency gains as strengthening economies force central banks to act. The rupee may gain almost 8 percent by year-end to 43 per dollar, according to the median forecast in Bloomberg survey. China’s yuan and Malaysia’s ringgit are estimated to advance 3.7 percent.

The Reserve Bank estimates India’s $1.2 trillion economy, Asia’s third largest, will expand 7.5 percent in the year ending March 31, more than its October forecast of 6 percent “with an upward bias,” Subbarao said in the statement today.

The bank left its benchmark reverse repurchase rate unchanged at 3.25 percent and the repurchase rate at 4.75 percent, today’s statement said. The increase in cash reserves will drain 360 billion rupees ($7.8 billion) from the banking system in two stages, on Feb. 13 and Feb. 27.

Exacerbate Inflation

“As growth accelerates and the output gap closes, excess liquidity, if allowed to persist, may exacerbate inflation expectations,” Subbarao said in the statement. “Though the inflationary pressures stem predominantly from the supply side, the consolidating recovery increases the risks of these spilling over into a wider inflationary process.”

India’s benchmark wholesale-price inflation accelerated to 7.3 percent in December, the fastest pace since November 2008. Food accounted for 80 percent of December’s inflation reading, government data showed, as deficient rains last year hurt output of rice, wheat and sugar.

Subbarao’s move is aimed at checking manufacturing inflation that surged to 5.2 percent in December from 1.6 percent in October. Industrial production rose 11.7 percent in November, the fastest pace in two years, as sales at companies including Hero Honda Motors Ltd. surged.

Hero Honda, the nation’s biggest motorcycle maker, reported a better-than-estimated 79 percent increase in third- quarter net income after sales climbed.

Food Inflation

“Tighter monetary policy will have no impact on inflation as it is largely a supply-side-driven phenomenon,” Harsh Pati Singhania, president of the Federation of Indian Chambers of Commerce and Industry in New Delhi, said before the report. “Interest rates should not be increased.”

Subbarao said there have been “some signs” of demand pressures on inflation and that he expects the current growth rate of 7.5 percent to continue in the next financial year starting April 1.

To ease supply constraints, the government on Jan. 13 announced plans to sell as much as 3 million metric tons of wheat and rice in the open market until March and permit duty- free imports of white sugar until Dec. 31 to increase supplies.

Prime Minister Manmohan Singh’s government is under pressure to tame inflation as opposition parties stepped up their criticism for failing to curb prices. Inflation is politically sensitive in India, where the World Bank estimates almost three-quarters of the nation’s 1.2 billion people live on less than $2 a day.

Subbarao said the withdrawal of monetary accommodation can’t be “effective” in controlling inflation unless the fiscal stimulus is also rolled-back in a coordinated manner. He said government borrowing must be cut to contain inflation and to meet credit demand of companies.

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General Motors is recalling some 22,000 Chevrolet Corvettes, because of potentially leaky roofs, National Highway Traffic Safety Administration said Wednesday.

The recall includes 2005-2007 model year Corvettes with removable roofs and 2006-2007 Corvette Z06s, according to GM.

A problem with the adhesive between the roof panel and the frame could cause them to pull apart, the agency said.

"If there is a complete separation, the roof panel may detach from the vehicle," according to the NHTSA. "If this were to occur while the vehicle was being driven, it could strike a following vehicle and cause injury and/or property damage."

Dealers will install a new design roof panel free of charge to correct the problem, NHTSA said in its recall notice.

The safety recall is expected to begin next month. Owners are being told Chevrolet at 1-800-630-2438 or at www.gmownercenter.com. 

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I always advise using a credit card to pay for major bills. Visa, MasterCard and American Express have guarantees that you won’t be held responsible for any fraudulent charges.

But no one spells out what counts as unauthorized use of your credit card. So, you may have to fight for your refund.

Here are a few cases of customers running into resistance when trying to reverse a credit card transaction.

Sandy De Domenico-Carless called Sirius Satellite Radio to order a two-year subscription. Later the same day, she changed her mind.

"Since I was cancelling on the day of activation, I wanted to confirm the initial payment would be credited. I was told yes," she says.

But her Visa statement showed the first $114.35 payment was charged to her account. What happened?

Unfortunately, Sirius is in financial trouble and tries its best to hang onto customers.

When she called to cancel, she was offered a cheaper plan and said she’d talk to her husband. She never made that call to decline later on. Sirius told Visa she hadn’t cancelled – even though her satellite radio was never activated.

Her husband sells cars with satellite radio. He managed to get the refund.

"If you cancel, I’d advise getting a name and making sure the person reads out loud the message they’re keying into the system. Better still, get everything in writing," she says.

June Clark and Catherine Kirk stayed at a Best Western hotel for one night before going on a cruise.

The two seniors paid the room charge in full. Later, a $100 fee for smoking cleanup appeared on Clark’s credit card.

"Neither my mother nor her sister are smokers," says Cameron Clark, June’s son.

They complained to American Express, which said the hotel talked about a smell of smoke in the washroom and evidence of ash pay day loans.

"It accused June and Catherine of attempting to cover up the smell by placing towels under the washroom door. And it said June signed a waiver at the time of check-in, accepting charges if there’s a need to clean the room."

The sisters suspected that any smoking had occurred after they checked out, either by an employee or contractor with key access.

But the premium card issuer wouldn’t budge until I asked it to review the case. I got a reply within hours.

"We are going to reverse the charges for June and absorb the cost for this," said Amex Canada spokeswoman Jolene Price.

Shamus Pikk signed up with Premier Fitness and cancelled his membership after one year. Still, he found an $18.13 charge on his credit card the next month.

Fitness clubs have a well-known habit of continuing to bill monthly fees and saying members didn’t cancel properly.

Pikk was well prepared for such a battle and took steps to head off additional charges.

One, he paid up front and got a written agreement that he wouldn’t be charged anything beyond his one-year contract.

Two, he got another written agreement when he cancelled that no further charges be incurred.

Three, he asked the person handling his paperwork to send a scanned copy to head office that said, "No payments due. Member paid in full at the beginning of the contract."

Sending copies of his emails to the Star also helped. And after cashing his refund, he promised to donate $40 to the Santa Claus Fund.

Next week, we’ll look at how to use PayPal to safeguard online purchases.

eroseman@thestar.ca

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Creditors of Saad Investments Company Ltd (SICL) held their first official meeting on Thursday, accountancy firm Grant Thornton said, taking a next step in the troubled firm’s restructuring process.

Banks are seeking repayment of a loan of up to $2.8 billion taken out in 2007 by Cayman Islands-registered SICL, a unit of Saudi investment firm Saad Group.

The meeting took place in the Cayman Islands, SICL’s court-appointed liquidator Grant Thornton said in a statement.

A spokesman for Saad Group declined to comment.

Regulators and bankers are grappling with up to $22 billion of debt restructurings at Saad and a second Saudi firm, Algosaibi, viewed by some as the biggest financial blow to the region since the global credit crisis began.

The two groups are involved in a complex legal dispute. Algosaibi said in October it would ask a New York court for a default judgment against the billionaire head of Saad, Maan al-Sanea, over allegations he defrauded the company out of $10 billion payday cash advances.

A Cayman Islands court on Sept 18 appointed Hugh Dickson, Stephen Akers and Mark Byers of Grant Thornton as joint official liquidators of SICL, the accountancy firm said, after hearing a winding-up order from creditors.

In addition to SICL, the Cayman court has appointed Grant Thornton liquidators to a further nine Saad Group companies, the accountancy firm said.

One of these companies is Singularis Holdings, which acquired a 3 percent stake in HSBC in 2007.

In July, a Cayman court froze the assets of SICL and a number of other international Saad units.

(Reporting by Tom Freke; editing by Simon Jessop and Andrew Callus)

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The phone call on Christmas Eve 2007 was like all the others. Gil Cornblum, a respected Toronto lawyer, told his law school buddy, an unemployed consultant named Stanko Grmovsek, that a corporate merger was about to take place — and to start buying stock.

The old friends had turned a profit that way dozens of times already, using confidential information garnered on deals by Cornblum to invest in companies ahead of major market moving news like mergers and acquisitions.

The merger in question was hardly high-profile — a U.S. manufacturer of construction equipment, Terex Corp, was buying ASV Inc, which designed and made track machines — but it led the duo to their biggest take ever, a nearly US$1 million pay day.

It was also big enough to alert authorities to Grmovsek’s and Cornblum’s audacious 46-deal, 14-year insider trading scheme — Canada’s largest ever. Over that span, they netted more than $9 million, according to Canada’s securities regulator.

The scheme came to light less than two weeks after the biggest hedge fund insider trading case in history, involving the Galleon Group as well as executives at several blue chip U.S. firms.

The Canadian case may have brought in less lucre, but the details — laid out in court documents and legal filings from the Ontario Securities Commission, the U.S. Securities and Exchange Commission and the U.S. District Court — read like a paperback detective novel on white collar crime.

GUILTY

On Tuesday, Grmovsek, 40, pleaded guilty to criminal charges; one day earlier, Cornblum, his closest friend and best man at his wedding, jumped to his death from a Toronto highway bridge. Both men had been cooperating with authorities in the U .S. and Canada.

The suicide came at the end of a long battle with depression, Cornblum’s wife Marilyn told the Globe and Mail newspaper. According to local media, he had unsuccessfully attempted suicide twice before during a months-long investigation involving law firm secrets and corporate mergers across the United States and Canada.

The pair hatched the scheme during Cornblum’s ‘articling year’ at a Toronto law firm from 1994 to 1995, U.S. prosecutors said. During that year, Cornblum provided Grmovsek with information on at least two mergers involving Canadian companies.

By 1999 both men were able to bring in about C$600,000 each from a brokerage account in the Bahamas which they used to purchase homes in swank Toronto neighborhoods.

But after cashing in on more than 40 blockbuster deals involving companies with names like Staples, ING Groep, and Alcoa Inc, and lesser-known financings and resource restatements by small mining companies, authorities investigated.

The case is both stunning in its simplicity and comical in its complexity, with the men growing increasingly paranoid as the years went by.

Friends and associates describe the two, but especially Cornblum, as respected and highly intelligent.

“I mean, who would have expected this?” said one person who knew Cornblum as a teenager in the late 1980s, describing him as a nice fellow who tended to keep to himself and was aloof to a degree. “He was a really bright guy, into the arts more than the sciences.” 

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When Russian billionaire Alexander Lebedev’sOAO National Reserve Bank seized collateral offered against a loan from a cash-strapped borrower, a health quarantine was slapped on the security: 40,450 pigs.

“We had a court decision to take away the collateral, which is the pigs,” Lebedev, 49, said in an interview in Moscow. The borrower, a farm near Samara on the Volga river, agreed “with the local authorities to establish a quarantine” against African swine fever. The former KGB officer is still waiting to collect the pigs offered against a loan of 100 million rubles (3.5 million). A kilogram of live pig costs an average of 78.4 rubles, the National Meat Association says.

Russian lenders are seeking to recoup losses by accepting a range of collateral, including stakes in Wild Orchid, a lingerie retailer, and food store Mosmart. The banks have been hit by a surge in non-performing loans, which Moody’s Investors Service estimates may rise to 20 percent of the total by year-end. The bad debt threatens to stall bank lending and may jeopardize a recovery in Russia’s economy, which grew 0.6 percent in the third quarter from the second, the Economy Ministry says.

“It is not a viable strategy for a bank because banks aren’t doing their core business there,” Eugene Tarzimanov, assistant vice president and banking analyst at Moody’s in Moscow, said. “They could be stuck with those assets for a number of years.”

Strange Assets

Russian banks are characterized by “very high risk on a global comparison,” Standard & Poor’s said in a Sept. 28 report. The share of “problem loans” may jump to $110 billion by year-end and account for 25 percent of total lending by the end of 2010, compared with 11 percent in the middle of this year, Moody’s estimates.

“We have no idea how to build roads, milk cows or pour metal,” said Vladimir Tatarchuk, co-head of corporate finance at Alfa Bank, told reporters in Moscow on Oct. 23. “We’re finance professionals, that’s what we do. We have no plans to develop other businesses. If we have an opportunity to sell immediately” assets taken as collateral, “we’ll do it, even if we lose some potential upside just so we can recover our money.”

Lebedev says loans secured with “strange assets” make up 5 percent of his bank’s total portfolio and as much as 20 percent of loan books at the country’s biggest state banks.

The banks are resorting to the “strange” collateral as their only alternative to cash as companies struggle to keep up with payments. The state-run banks, which include Russia’s two biggest lenders, OAO Sberbank and VTB Group, have “less leeway” to pressure borrowers to service debt, said Tarzimanov.

“They are obviously controlled by the government, and they have a social mandate and fewer options when there is a difficult situation,” he said.

Lingerie, Liquor

The list of unorthodox collateral filling up banks’ balance sheets is long. Sberbank received a holding of 50 percent plus one share in Wild Orchid. Russia’s biggest lingerie retailer pledged the stake as it seeks to restructure 1.6 billion rubles of debt owed to Sberbank, Anton Sergeyev, a spokesman at Wild Orchid, said by phone.

Russia’s largest lender also owns more than 50 percent of food retailer Mosmart, according to Vitaly Podolski, its chief executive officer.

VTB has taken majority stakes in 11 alcohol producers as payment for debt and became a majority shareholder in two developers, including a project to overhaul the Dynamo soccer stadium in Moscow.

As government-controlled banks’ balance sheets swell with non-financial assets, the lenders may be forced to rethink their approach to the terms under which they provide credit.

‘Burdened’

“State banks are burdened with social responsibility to a greater extent than” their private counterparts, Zaali Tsanava, director for collecting overdue corporate debt at Moscow-based Alfa Bank, said. “But the situation is developing in such a way that state banks will have to review their policies and perhaps adopt a more stringent approach” because “even they can’t afford to give away money.”

The banks’ books are filling up with risky assets as their capital buffers dwindle. Russia has stress-tested all its banks and a number of the 100 biggest lenders won’t fulfill capital adequacy requirements, central bank First Deputy Chairman Gennady Melikyan said on Oct. 21. Capital shortages may appear within six months, he added.

Banks and other companies may struggle to sell debt to consolidate their balance sheets next year as investors opt to buy government bonds instead, according to Bank of America Merrill Lynch. The government plans to sell as much as $18 billion in debt in 2010 to plug an estimated deficit of 6.8 percent of gross domestic product. The economy may shrink 7.5 percent this year, President Dmitry Medvedev said on Oct. 11.

‘Flush Out’

While initial and secondary public offerings by banks in which the state has holdings are possible, they are only likely to happen after “non-performing loans flush out of their system and stabilize,” said Steven Meehan, UBS AG’s chief executive officer for Russia in an interview at a conference in Moscow.

The banking industry may face more volatility as it seeks to dispose of the collateral it seized, said Svetlana Kovalskaya, an analyst at Moscow-based investment bank Aton.

“The risks will increase if the economic recovery drags on and asset prices don’t return to pre-crisis levels,” she said.

Meantime, Lebedev is still waiting to collect the pigs, which he plans to take to a slaughterhouse or another farm.

“One of the big risks is how do you protect your investment against people who don’t want to pay you back anything,” he said. “But you don’t sit and wait until the economy switches on again. You do something about it.”

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Boeing Co on Wednesday posted a larger-than-expected quarterly loss on costs related to its long-delayed 787 Dreamliner program, but the world’s second-largest planemaker reaffirmed that the aircraft is on track to fly this year.

The loss, combined with a lowered 2009 earnings outlook, sent shares down in early trading, although most of the details in the earnings statement had been previously publicized.

“The surprise was they reiterated the (787) schedule,” said Alex Hamilton, senior managing director at Jesup & Lamont.

“I always look at these as opportunities to kind of reset the bar,” Hamilton said. “I think there’s a lot of skepticism growing on the street about their delivery schedule.”

Chicago-based Boeing and rival Airbus have been hit hard this year as carriers and cargo operators grapple with the global recession and credit crisis. Meanwhile, Boeing’s defense unit struggles with sweeping government budget cuts.

Boeing said its revenue was $16.7 billion, up 9 percent from the year-ago period, which was impacted by a labor strike, but still far short of $17.16 billion that analysts had expected, according to Thomson Reuters I/B/E/S.

“There is no doubt that both our commercial and defense businesses continue to face challenging times right now,” Boeing Chief Executive Jim McNerney said on a conference call with analysts and reporters.

Shares of Boeing, a Dow component, were down 1.18 percent at $51.28 at midday on the New York Stock Exchange.

DREAMLINER ON TRACK

Boeing has grappled this year with delays to the Dreamliner program no fax needed payday loans. The Dreamliner is Boeing’s upcoming aircraft that features revolutionary composite materials and construction methods. The plane is two years behind schedule, and some industry watchers say it could be delayed further.

Boeing said on Wednesday the plane would fly this year with first delivery set for the fourth quarter of 2010. The company has a record 840 firm orders for Dreamliners from 55 customers.

The company previously said it would reclassify to research and development costs incurred through July for the first three 787 flight-test planes. Those costs amounted to $2.46 per share. Boeing reported an additional cost of 14 cents per share related to spending on those planes for August and September.

Earlier this month, Boeing said it would delay the first flight and delivery of its 747-8 Freighter and take a 99-cent-per-share third-quarter charge because of high production costs and tough market conditions.

To reflect the 787 and 747 impacts, earnings guidance for 2009 has been changed to a range of $1.35 to $1.55 per share, from $4.70 to $5.00 previously.

“The 787 cost reclassification and the 747 charge for increased costs and difficult market conditions clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business,” McNerney said in a statement. 

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Several U.S. companies have awarded stock options to top executives while engaged in merger negotiations, the Wall Street Journal said, citing an academic research paper and its own review of company filings.

The practice of awarding options, though legal, has resulted in the target company’s executives reaping a bigger payout when the deal is closed, the paper said.

The paper said its survey of company filings found stock options had been awarded to executives in a half dozen large mergers since 2007, including Adobe Systems Inc’s deal to buy web analytics firm Omniture Inc and Walt Disney Co’s purchase of Marvel Entertainment Inc banks issue payday loans.

Marvel and Omniture could not be immediately reached for comment by Reuters outside regular U.S. business hours.

(Reporting by Sakthi Prasad in Bangalore; Editing by Clarence Fernandez)

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Network equipment maker Cisco Systems Inc struck a deal to buy Norwegian videoconferencing company Tandberg for $3 billion in a bid to dominate the high-growing market of corporate video communications.

Analysts said the move ratchets up competition, and possibly more deals among video conferencing providers like Hewlett-Packard Inc and Polycom, and underscores Cisco’s focus on video conferencing which enables workers everywhere to interact with colleagues and customers online.

The acquisition of Tandberg, a market leader in video conferencing, helps Cisco fill the gap between its high-end TelePresence video meeting service for executives and its WebEx online meeting software used by millions of office workers.

Tandberg offers a variety of desktop and other mid-range products. Its units sell for around $7,500 each, while Cisco’s TelePresence units cost about $250,000.

Jefferies analyst Bill Choi said the combined company would have close to 50 percent market share, and the deal would help Cisco speed up growth of its video business.

“We always expected Cisco to move downstream and this acquisition accelerates its time-to-market by at least 18 to 24 months,” Choi said.

Cisco sees video conferencing driving sales of routers and switches, which help direct Internet traffic and are its traditional bread and butter. Online, high-resolution video requires ample bandwidth as well as advanced network equipment to ensure smooth connections.

“They realize that if they don’t find new purposes for the network they’re going to get commoditized,” said Gartner analyst Ken Dulaney.

Tandberg said its board has recommended the Cisco offer to its shareholders and Chief Executive Fredrik Halvorsen said major shareholders had voiced support for the cash offer of 153.50 Norwegian crowns ($26.49) a share. Halvorsen will continue to lead the unit if the acquisition goes through.

GROWING MARKET

Shares of Tandberg, which had almost doubled in value this year on takeover speculation, closed 11 percent higher at the offer price of 153.5 crowns on Thursday. Cisco’s shares fell 45 cents, or 1.91 percent, to close at $23.09 on Nasdaq.

Video conferencing has taken time to gain traction, but faster Internet speeds and pressure to cut corporate travel have helped boost adoption in recent years. Cisco last quarter said revenue from TelePresence nearly doubled from a year earlier, even as router revenue fell 27 percent.

Cisco estimates the total value of collaboration tools, including everything from videoconferencing to conference calls to Google Apps, to be worth about $34 billion.

Most analysts said a rival bid was not expected, although they did not rule it out. Potential suitors include HP, which is also active in Web collaboration. The market has also linked telecoms gear maker Ericsson with Tandberg.

DnB NOR Markets in a report on Thursday cited Juniper, International Business Machines Corp, Sony Corp and Siemens. 

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Las Vegas casino company Wynn Resorts raised $1.63 billion after pricing its Asian IPO at the top of its indicated range, a sign that demand is still strong for certain offerings despite a glut of Asian stock deals.

Wynn Macau, the fourth-largest global IPO this year, now faces the challenge of its Hong Kong trading debut, where several new listings have been battered by increasingly selective investors.

Wynn Macau sold 1.25 billion shares Hong Kong-listed shares at HK$10.08 each, according to two sources with direct knowledge of the deal but were not authorized to speak publicly about it.

The IPO’s range was HK$8.52-HK$10.08, with Wynn selling 25 percent of the business to the public.

But some brokers said the high price may make a strong debut more difficult for Wynn.

“The valuations are really high and market sentiment is not that good now,” said Conita Hung, head of equity research for Delta Asia Financial Group. “I don’t expect this to be a good one.”

On a 2010 enterprise value to earnings before interest, tax, depreciation and amortization ratio (EV/EBITDA), Wynn Macau trades around 16 times, much higher than Macau gambling tycoon Stanley Ho’s flagship casino firm SJM Holdings’ 7.5 times, according to Credit Suisse analyst Gabriel Chan.

The Macau gambling sector EV/EBITDA average trades at around 14.5 to 19.4 times, Chan said.

“It’ll get a big hit,” said Linus Yip, strategist at First Shanghai Securities, referring to the Wynn Macau debut. “The main concern is the price range.”

“MCC had set its price at the middle of its range, but it still fell below the issue price. Valuations for Wynn are definitely still a concern.”

The dismal debut of Metallurgical Corp of China (MCC), a building and engineering firm, last week has weighed heavily on investor sentiment for new share offerings in Hong Kong.

Wynn’s successful sale also puts pressure on arch-rival Las Vegas Sands, which plans to raise billions of dollars through a public offering in Hong Kong at the end of November or early December.

NOW THE HARD PART

The Wynn Macau offer is especially important given the deal’s potential impact on the company’s flagship Las Vegas operations. Wynn is hoping a high valuation through the Hong Kong listing will boost valuations at its other divisions.

U.S. casino operators, grappling with high debt levels and a recovering economy, are hoping to boost valuations through spinoffs in China’s gambling hub, Macau, the former Portuguese colony located an hour away from Hong Kong by ferry. 

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