European markets fell Tuesday morning, and US market were set to open lower following the Greek announcement that a vote on the bailout package will be allowed, throwing into question the fate of Greece in the European union, and igniting calls for the resignation of Greece’s Prime Minister George Papandreou.
While many had hoped that last week’s summit would quell fears in a turbulent market, this announcement has served to further stir up financial markets, with bank shares falling and investors fleeing to the security of German bonds. Despite the actions of the Central Bank, Italy also saw its borrowing costs rise.
The next few weeks will prove to be a volatile time for financial markets, as Greece will have to act quickly in order to avoid further long-term damage to both the country and global equity markets. As the situation in Greece continues to play out, market volatility could prove to offer some excellent buying opportunities for a long-term investment strategy.
Even in light of the commotion in Europe, there are opportunities abound if you know where to look. Smaller corporations and companies that are conducting business in emerging markets may provide investors with opportunities to profit in this environment.
Look For Domestic Companies With Emerging Market Exposure
While investing in emerging markets is important for successful portfolio diversification, with the uncertainty surrounding the markets, a play on corporations that sell in emerging markets, as opposed to investing directly in emerging markets may be the best strategy for realizing investment gains.
With Europe dominating the headlines, it is important to try to look past the short-term volatility as the situation is being resolved. The US stands to benefit from any resolution coming from the Euro zone, making the dips in market that will most likely occur in the coming weeks an opportunity to look for value and upside potential.
In a direct play in emerging markets, there are additional risks to consider such as little or no access to a company’s fundamentals, making picking local winners a challenge. There is also an added risk of investments losing money due to currency fluctuations, making investing in US based companies that conduct global business a more ideal investment option.
Betting On Emerging Markets With Las Vegas Sands
For this type of play, Las Vegas Sands (LVS), may be ideal. The company owns and operates casinos and luxury resorts in Las Vegas, Nevada with expanding operations in Macau. October saw a new record in Macau’s gambling revenue, which rose 42% to $3.4 billion.
With a growth rate of over 50% – beating the average industry growth rate of 36.01% – Las Vegas Sands could be poised for continued upside potential. There seems to be no slowdown in demand from Chinese tourists, who continue to defy worries as to the state of the global economy, as well as the domestic credit squeeze.
Las Vegas Sands derives the majority of its income from the Marina Bay Sands Casino, Sands Macau, and Venetian Macau casinos, and reported revenue for the third-quarter that was up from $1.91 billion last year to $2.42 billion, exceeding the forecasts for $2.34 billion in revenue.
As this former Portuguese colony is the only location in China where gambling is legal, Macao is enjoying revenue gains that are five times higher than in Las Vegas, although investors remain concerned about growth slowing in the coming year.
Las Vegas Sands Operations In US Strong As Well
In the US, Las Vegas Sands’ operations, which are anchored by the company’s signature casinos the Palazzo and the Venetian, fared well also with $94.3 million in adjusted operating earnings for the third-quarter, a rise of 62%.
The casino giant is also expected to target “high rollers” – an demographic that the casino has had trouble capturing – although the success of this campaign will not be apparent until into 2012.
Las Vegas Sands is well balanced across both domestic and emerging markets, and is expected to remain focused on volume growth going forward, making this casino a potentially profitable round-about play into emerging markets.