• Macao’s new chief executive will usher in an era of ‘much tighter oversight by Beijing,’ according to Hong Kong risk consultancy Steve Vickers Associates
• A memo from the firm urged casinos and related companies to anticipate threats, which could be in the form of new measures to curb capital flight

A top Hong Kong-based security consultancy predicts Macao’s incoming government will intensify the push for economic diversification at the expense of foreign-owned gaming concessionaires, their investors and the myriad of downstream businesses reliant on the gaming industry in the SAR.

Steve Vickers Associates (SVA) issued a memo on Monday recommending that boards and executives with investments in Macao (as well as Hong Kong and the mainland) stay alert to growing risks associated with state intervention and measures introduced to prevent capital flight. SVA urged potentially impacted companies to “anticipate threats” in order to mitigate any potential losses.

The firm claimed that Macao’s newly-elected chief executive designate, Sam Hou Fai, would “likely expedite measures forcing the six casino concessionaires to diversify and contribute more to social causes” in response to policy pressures from Beijing.

While Macao has a very high per capita gross domestic product, the city suffers from significant income inequality – something SVA said Sam would be aiming to curb. SVA also raised the possibility of the central government placing Macao within the yuan’s currency zone as part of Beijing’s ongoing crackdown on capital flight.

The memo described Sam as a policy maker “cultivated and trusted by Beijing.” It noted that the former judge will be the first mainland-born leader of the SAR, and the first chief executive without a strong business background. “Sam’s election promises much tighter oversight by Beijing [and] rising political risks for businesses in Macao – mirroring the situation in mainland China,” SVA said.

After winning October’s election, Sam is set to take the reins from incumbent Chief Executive Ho Iat Seng on 20 December. During Sam’s campaign, he both criticised the gaming industry for its negative impact on society and acknowledged its critical importance to Macao’s job market. He has repeatedly stated that he wants to see the city’s six concessionaires “develop in a healthy manner.”