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Casino ETF & Stocks Suffering the Coronavirus Blow

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The coronavirus outbreak is showing no sign of slowing down. The fatality count in China has crossed 1000, with around 42,638 confirmed cases. Moreover, new cases confirming coronavirus infections are being reported from different parts of the world. As of now, 25 countries have confirmed coronavirus cases and the death toll outside mainland China currently stands at 2.

Resultantly, major retailers, casinos,  restaurants and hotels in the United States, which earn a large portion of revenues from operations in China, are expected to suffer. Some of these companies have been asked to remain closed with the outbreak getting severe. Going on, the coronavirus surfaced during the Lunar New Year holidays in China, a time when a large chunk of people move out for either holidays or to visit their families in China from abroad (read: Will Consumer Discretionary ETFs Suffer the Coronavirus Blow?).

Casino stocks are also suffering as tourist visits to Macao fell 60% year over year through the third day of the Lunar New Year holiday (per Deutsche Bank). Moreover, in the first week of February, Macau announced plans to shut down casinos for another two weeks in an attempt to put a check on the spread of the virus. Major players like Wynn Resorts (WYNN - Free Report) , Las Vegas Sands (LVS - Free Report) and MGM Resorts International (MGM - Free Report) are also facing the heat.

Notably, the CEO of Wynn Resorts announced that the company was facing losses between $2.4 million and $2.6 million per day due to the casino shutdown orders. As a matter of fact, Wynn operates Wynn Macau and Wynn Palace properties that together made up for $1.08 billion of the company’s $1.65 billion in revenues during the fourth quarter.

The coronavirus outbreak does raise investors’ concerns over the performance of casino stocks and ETFs as Macao has emerged as the gambling capital of the world. Also, in comparison to $6.5 billion in Las Vegas, casinos in Macao recorded gross gaming revenues of $28.04 billion in 2018. According to a gambling consultant and investor, Matthew Ossolinski,  Macao’s gambling revenues in 2020 could decline 5-15% due to the shutdown of two weeks (read: 5 ETFs to Protect Your Portfolio From Coronavirus Threat).

Against this backdrop, investors can take a look at the following ETF:

VanEck Vectors Gaming ETF (BJK - Free Report)

The fund seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the MVIS Global Gaming Index, which is intended to track the overall performance of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. Moreover, the fund provides 18.1% exposure to the abovementioned companies, while holding a basket of 42 stocks. It has an AUM of $24.3 million and charges 0.66% in fees. The fund has lost 1.5% in the year-to-date period and 3.5% in the past month (read: Wining & Losing ETF Areas on Coronavirus Outbreak).

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