Shares have closed higher, led up by financials and mining shares which were buoyed by higher commodity prices.
The ASX rose 0.4 per cent to 5410.8 and the All Ords added 0.4 per cent to 5492.0.
While the equity market rose, bonds were sold off, pushing yields higher.
"The market's been quite choppy, it's up today but it could all change tomorrow if we get some not so great Chinese data," said Kerry Craig, global equities strategist at JP Morgan Asset Management. "There's some genuine shifts in investor sentiment that aren't driven simply by the idea of tapering by central banks.
"Over the last few weeks that's really seen the bond and equity markets sell off, but today that looks to have broken down a bit, with yields rising and the market going up as well."
Miners BHP and Newcrest were among the biggest tailwinds for the index, rising 1.1 per cent and 3 per cent respectively, while Rio ended flat.
Tatts Group and Tabcorp shares were placed into a trading halt, amid speculation the two have reignited merger talks. Tatts had brief talks with Tabcorp about combining the pair's businesses, which would have created a $10 billion wagering giant. Tatts shares are frozen at $3.59 and Tabcorp's at $4.89.
Crown shares were boosted in early trade after several analysts suggested the stock might be a buy following its 14 per cent slump to $11.15 yesterday. Investors fled the stock on Monday after news broke that 18 Crown employees were arrested in China, including three Australian citizens, but Citi said the selloff was an "overreaction". The stock managed to close 1.7 per cent higher at $11.34, losing some of it early momentum.
The trend is your friend, is an old investing adage, but Macquarie also reminds us that it can pay off to hedge against the consensus.
The bank's equity strategy team sees five key consensus calls where a slightly different outcome than expected is likely to come with significant positioning implications.
"We think hedging against the consensus being wrong is worth considering in overall risk-reward space."
Here are today's five most popular consensus calls, along with Macquarie's alternative view and top hedging recommendations:
- Commodity prices will fall over the next months as Chinese growth momentum (led by property) tails off. It is conventional wisdom to think that China's housing market is simply a credit fuelled bubble that will unwind as property tightening is more broadly implemented. The alternative view is a mismatch between supply and demand and no overinvestment. On this basis, property will slow, but overall growth will not be threatened. Best non-consensus hedge: Long capex derivatives –ALQ, DOW, WOR which are due some earnings relief even if commodity prices head lower.
- Global inflation risks remain benign with limited upside in nominal bond yields. There is risk to the consensus underestimating a pick-up in headline inflation particularly as the US dollar and oil shift from headwinds to tailwinds. In addition, the willingness of central banks to let inflation run "hot" in order to protect a nascent recovery is non trivial. Best non-consensus hedge (after commodities and gold): Long yield curve steepeners - ANZ, CBA, WBC.
- The Democrats win the US presidential election with a stronger showing in both the Republican controlled House and Senate. It is difficult to see a Trump victory given current polling differentials and as momentum continues to desert the Republican nominee. However, this is what makes the potential for surprise so significant. Best non-consensus hedge: BLD, JHX, RWC as US growth upside beneficiaries.
- The Aussie dollar upswing begins to reverse versus the US dollar as the Fed tightens and as the RBA continues to jawbone the $A down. Strong growth, firm commodity prices, and a falling unemployment rate are key markers that could solidify the view that the RBA easing cycle is over and the $A is headed higher. Best non-consensus hedge: JBH (Restricted), NCK, TRS.
- Overweight "growth" and underweight "value". Despite the strong correlation between value and momentum this year, there is little conviction outperformance can be sustained. The absence of improving financial sector earnings and a belief that the commodity upswing is unsustainable underpins the status quo. However, "growth" is expensive and vulnerable to higher rates even without a strong cyclical earnings upswing. Best non-consensus hedge: BSL, FMG, HVN.
Don't worry too much about Donald Trump, the French presidential election next year could be potentially "explosive" for global markets, Citi chief global equities strategist Robert Buckland has warned.
Buckland said he's much more concerned about the French election in April/May than the US presidential election, because of the overwhelming opposition in France to the European Union, which recent polls put at 60-40 against EU membership, compared with 50-50 in the UK before the Brexit vote.
"I would probably put that as potentially more market sensitive than the US presidential election," he said.
Beyond the Mexican peso, which is considered a sentiment indicator for a possible Trump victory as the country's southern neighbour is likely to be most affected by Trump's protectionist trade policies, there are few assets he'd trade in advance to the US election, Buckland said at a Citi investment conference.
"If you gave me perfect foresight as to what the election result would be, I actually wouldn't know what trades to put on."
On the other hand, a victory by an anti-EU candidate in the French election would be much more market sensitive than the Brexit vote.
"It's much much more complicated if France leaves than if the UK did because France is a member of the eurozone."
One of the lessons of the Brexit vote for him was that financial markets don't necessarily understand political forces.
"Whatever chance you think the populist candidate has, they're higher than you think."
The rallies in commodities are not the building block for a sustained lift in the Australian dollar, ANZ says.
Economists for the bank Katie Hill and Daniel Been say while the 20 per cent rise in the RBA commodity price index year to date has added around US2.5¢ to the fair value of the Aussie, the bulk of the gains are now behind us.
"The rise in commodity prices has broadly reflected a combination of a recovery in steel production, falling Chinese coal and iron ore output, and in some cases tighter supply," the economists say in a research note.
"From here, we expect further upside will be capped by increased supply and a likely reduction in steel demand given that Chinese authorities have recently introduced new property restrictions in some major cities."
ANZ believes the commodity price gains have been priced into the currency, which is sitting at US76.69¢, and is now trading at fair value.
Any further boost from commodities is limited because the price rises are unlikely to drive further investment, they say.
"The greater upside risk for the AUD would be if rates markets begin to price in RBA hikes. However, we would emphasise that this is not our base case."
China's housing market is starting to resemble a Bermuda triangle for economists: time and again the smartest forecasters wade in only to get it wrong.
That's the view of Larry Hu, head of China economics at Macquarie Securities in Hong Kong, who describes the latest talk of a housing bubble in the world's second biggest economy as a recurring myth. Instead, rapid price gains in the biggest cities merely reflect underlying demand and a supply shortage, fundamentals that are very different to the kind of credit-fueled property boom-and-bust cycle seen elsewhere.
Official data show property prices rose by the most in six years in August. While gains have been most apparent in large cities such as Shenzhen, where home prices are up about 60 per cent in the past year, many smaller cities have missed out.
"The difference between overinvestment versus mismatch is the single most important thing to keep in mind when thinking about China's property sector, as these two views have vastly different implications for investment and government policy," Hu wrote in a recent research note.
Big cities like Shanghai are experiencing net immigration with only limited blocks of land coming on the market. "If Shanghai sells only one parcel of land in a year, the price of the land must be extremely high – this is not a bubble; this is a shortage of supply," Hu said.
China's property market has become increasingly polarised over the past three years. Skyrocketing surges are mostly seen in major metropolises or regional hubs, while housing at the national level has actually become more affordable, in part due to rising incomes.
Hu isn't blind to the risks and warns that runaway house prices may threaten economic growth. For example, it discourages investment in the real economy and leaves households with less cash to spend. But he sees the risks as manageable and concerns of a bubble as overblown.
Speaking of banks, the sector is leading a stronger ASX this afternoon, in a month that is usually positive for the big four.
Banks ex-diversified financials rise 4.01 per cent on average in the month of October, according to Bell Potter's Richard Coppleson. It's head and shoulders ahead the next best, diversified financials, which lift 2.59 per cent.
But it's a different story come November, when the banks fall 2.46 per cent.
"Looking back to 2000, we can see the banks rally strongly in October in the lead up to their dividends," Coppleson writes in his daily Coppo Report, adding they tend to underperform in the lead up to their ex-dividend date.
"It's important to realise that the run up has been fluctuating earlier for the banks, with the peak often occurring well before the ex-date, with the banks then selling off in the final weeks just before their ex-date," he says.
In other words, traders are playing the seasonality and are increasingly heading out the door sooner to beat the rush.
For the record, here are the ex-div dates for the big three (CBA reports in August) as they prepare to report full-year profits:
National Australia Bank: 4 November
Westpac: 14 November
ANZ Banking Group: 14 November
Our banks are often ranked among the world's most profitable lenders, but there's one area where they appear to be lagging some big global peers: the incentives they pay staff.
With regulators grumbling about the cultural problems in finance for a few years now, several big banks overseas have taken the knife to conflicted bonus payments, which many see as the root of the sector's cultural problems.
HSBC replaced sales targets for front-line staff back with customer satisfaction targets in 2013, following a move by Barclays in 2012.
RBS, led by former Commonwealth Bank executive Ross McEwan, also scrapped bonuses for its retail bankers in November last year, raising fixed pay among 20,000-odd staff to compensate them.
Our own banks launched an inquiry into remuneration earlier this year, but they have been slower off the mark reacting to public concerns about the role of bonuses in pushing staff to sell products, known as "cross-selling".
This is one of the insights provided in a submission from several leading consumer groups to the Australian Bankers' Association's review of remuneration in retail banking.
The review, announced in April, is looking at commissions and other type of payments that reward bank staff for hitting sales targets or for referring a customer to a financial planner.
The submission, from the Consumer Action Law Centre, Financial Rights Legal Centre and Good Shepherd Microfinance, argues for a sweeping overhaul of the bonus systems that reward staff for hitting product sales targets. To support their case, the groups highlight overseas economic studies that provide hard evidence of what damage a poorly designed bonus scheme can do.
Australia's most successful hedge fund manager and a backer of the Brexit campaign says Britain's next generation will be better off after exiting the European Union.
Sir Michael Hintze, the billionaire founder of London based credit hedge fund CQS, said Britain faced risks if it chose to leave or stay but his support of the controversial vote was "all about sovereignty and the ability to control one's destiny".
"My sense is within five to 10 years Britain will be no worse off and I sense within a generation it will be better off," he told The Australian Financial Review.
Hintze, a well known contributor to conservative governments, donated £100,000 to the campaign but said he did not take an active role in pushing the case to leave.
The contribution is less than the donations made by others like Goldman Sachs and other [hedge] fund managers like Winton's David Harding to the remain campaign.
As debate in Britain centres around whether the country should engage in a "hard" or "soft" Brexit, Prime Minister Theresa May, he says, is "very much a believer in democracy and [she has made it clear] her view is that the people have spoken, it's time to go."
CQS now manages $US12 billion and Hintze manages the Directional Opportunities Fund. The fund is having another strong year and is believed to be up by more than 20 per cent, year to date.
The key call, Hintze says, was made at the start of the year – to have realised a systemic collapse was not likely on China and commodities when the market had grown increasingly fearful on both fronts.
"If you looked at the global consumption curve of oil – it couldn't go to $US100 [a barrel] but by the same token it couldn't go to $US10 for a sustainable period of time," he said.
Whitehaven Coal's shares dropped as much as 4 per cent this morning after Credit Suisse downgraded the stock to 'underperform', saying coal prices have probably peaked and the stock is looking expensive after its 300 per cent rally over the past six months.
Analyst Paul McTaggart reckons met coal prices have peaked in this quarter.
"High prices will entice re-starts of shuttered capacity and increased washing of met coals that have been recently sold as unwashed thermal coal."
Thermal coal has also likely peaked, he says, as China looks to loosen the restrictions which caught the market unawares and drove up imports and prices.
McTaggart predicts financial-year 2017 earnings will be the peak for Whitehaven in this coal price cycle, with earnings per share in financial year 2019 falling by close to 60 per cent.
"With the WHC share price up about 800 per cent since February 2016 lows (37.5cps) we find it hard to see much upside from here," he says.
Credits Suisse downgraded the stock from neutral but lifted the target price to $2.80, from $2.45. It's currently at $2.93, down 1.35 per cent for the day.
Meanwhile, Morgan Stanley is sticking with its 'overweight' recommendation and has a price target of $3.10, saying the benefit of higher contract prices is yet to fully kick in.
"Whitehaven has had a strong run and the lower met coal volume, lagged price benefit and lower thermal realisation may be used by some to rationalise a reduced exposure," analyst Brendan Fitzpatrick says. "We re-emphasise the volume growth, product mix and price realisation benefits yet to come through as Maules Creek ramps up.
"Coupled with elevated prices, Whitehaven should rapidly accumulate cash which we expect to support the equity."
How's this for a big call: the Australian dollar is likely to hit US85¢ within five years and could trade as high as US90¢ because US interest rates aren't going to rise as much as expected, according to one of the world's bigger private equity funds.
The director of research for the Carlyle Group, economist Jason Thomas, who was in Australia last week to brief the investment giant's clients, said the US economy has been hit unexpectedly hard by a drop in oil and gas prices, which is hurting investment.
A reduction in business investment is likely to mean that US interest rates aren't going to rise a lot compared with other countries, he said, which means the US dollar is likely to fall.
"The US was the first into the tightening cycle and it is going to be the first to end the tightening cycle," he said in an interview.
"The net impact of the oil bust ... is probably negative. The US economy appears to have decelerated by much more than most external observers perceive."
A weakening US economy would likely drive up the Australian dollar, hurting the RBA's strategy of stimulating exports by cutting interest rates to 1.5 per cent, which has pushed the dollar down to around US76¢. But if other currencies also rise against the US dollar, the hit to Australian trade could be muted.
Mr Thomas said the US dollar will fall between 8 and 15 per cent, driving the Australian dollar to US85¢, or even higher in the coming five years. "Ninety [US90¢] seems possible," he said.
Mr Thomas said earnings of companies in the S&P 500 share index of leading stocks had fallen for five consecutive quarters. "That's the first time we've seen that out of a recession," he said.
The message from the Reserve Bank is clear: it's all about growth at the moment.
The minutes of the RBA board's October 4 interest rate meeting concentrated on the economy's momentum, conditions in the jobs market, and risks in the housing market - all of which ultimately affect inflation - but made few direct mentions of the inflation rate itself.
Whether by accident or design, the focus is in line with the main problem facing the RBA: getting the economy growing quickly enough to lower the unemployment rate.
The central bank judged the prospects for growth as remaining reasonable and was content to sit on the fence until September quarter inflation data became available.
"This would provide an opportunity to consider the economic outlook, assess the effects of two previous reductions in the cash rate and review conditions in the labour and housing markets," the minutes of the RBA's October meeting said.
As it was Philip Lowe's first major speech as RBA chief, pundits were looking not only for orientation on interest rates but also on differentiation from his predecessor, the usually very reserved Glenn Stevens. And they weren't disappointed as Lowe made some unusually frank remarks on the US elections.
The governor said if Donald Trump were to win next month's US presidential election it would be more of a shock to financial markets than the Brexit vote in June, which in hindsight was "benign".
In response to an audience question, Lowe said the bank had not done particular scenario planning for a Trump presidency, something that is unlikely, according to polls. However, the RBA does develop a "generic" response for potential "major financial disturbance".
While Brexit caused volatility in share prices and a plunge in the pound, regulators such as the RBA have concluded it was "benign" because it did not cause stress in credit markets used by banks to fund themselves.
Lowe also said his biggest global concern was the threat of rising protectionism and a decline in support for globalisation.
"We thought about this in Brexit but that turned out to be a fairly benign event in markets. The possible election of president Trump I suspect wouldn't be as benign event, but we don't have a Trump plan, what we do is have a generic response plan to a whole range of shocks," Lowe said.
The comments came as Lowe indicated his top concern about the world economy was the declining support for globalisation.
"If I go through the list of things that make we worry about the global economy … right at the top of that list is the shift towards protectionism," he said in response to another question.
"I suspect that the high-water mark for support for open markets is probably behind us, and the Australian economy has benefited greatly over decades from open markets. The global economy has also benefited, and if we're inching away from that I think that's problematic for us all."
Economists are putting out their reactions to this morning's speech by RBA governor Philip Lowe, with UBS economists highlighting the importance Lowe placed on upcoming inflation data:
Overall, Lowe's comments suggest that if worries over housing/leverage abated and the labour market deteriorated – while inflation remained low – we think there is risk of further easing over the medium-term.
Lowe sees both the housing and labour markets as "mixed", and "there has been some lessening of the [leveraging] concerns that were building up last year". However, we still think the RBA will remain on hold ahead, particularly given housing is likely stronger than the RBA thinks (and see UBS housing 'supply tracker': upgrading again… the boom is even bigger).
For the near-term policy outlook, Lowe put weight on "important" Q3 CPI data [on Oct 26], which points to a still "reactive" policy function if inflation misses materially. Indeed, Lowe highlights that the rate cuts this year were "not in response to concerns about economic growth".
ANZ economists point out the governor expects inflation to stay low, but that Lowe reinforced the flexible nature of the target:
The key considerations for policy continue to be inflation and the housing and labour markets. Inflation expectations are also important.
With inflation set to stay low for an extended period, we believe the RBA holds an easing bias tempered by concerns over financial stability. Actual inflation and labour and housing market data are the key data to watch.
We expect next week's Q3 CPI report to show that average underlying inflation remains low (+0.4% q/q, +1.5% y/y), broadly consistent with the RBA's forecasts. A material surprise in Q3 inflation would be significant, although we expect that in this scenario the Bank would be more likely to wait for more data on the economy (Q3 GDP in early December, and more information on the labour and housing markets) to further evaluate the impact of the rate cuts in May and August.
Like their peers, CBA said upcoming inflation numbers are crucial, but also:
[Lowe] spoke about the feedback loop between actual inflation outcomes and inflation expectations. Specifically, how low inflation outcomes mean that workers have agreed to lower wage outcomes, which is turn have reinforced low inflation outcomes. We recently wrote on the topic here.
Given the importance of actual inflation for inflation expectations, next week's Q3 CPI will be an important update. In our view, an underlying CPI of 0.3 per cent or lower will trigger a rate cut at the November meeting.
Lowe presented some new RBA research on wages growth in Australia. The research looks at wages for all 18,000 jobs that the ABS uses to calculate the wage price index. The RBA found that there has been a decline in the frequency of wage increases, and that when wage increase do occur, the average size is lower. The share of employees getting a wage increase of 3-4% and more than 4% has declined sharply over the past 4 years. Wage increases of 0-2% and 2-3% and now the most common.
Oil Search has posted a 16 per cent increase in quarterly revenue on the back of an increase in LNG and gas prices and higher production from the PNG liquefied natural gas project.
The oil and gas producer has reported total revenue of $US309.5 million for the three months to September 30, up from $US267.7 million in the June quarter.
The Papua New Guinea-focused company said total quarterly production was up 6 per cent at 7.63 million barrels of oil equivalent (mmboe), while sales volume rose four per cent to 7.49 mmboe.
Shares are up 0.2 per cent at $7.08.
Deutsche Bank analysts have upped their call on Crown to "buy", echoing their peers at Credit Suisse by stating that the market reaction looks "excessive".
"Following the detention of Crown's VIP employees in China, we estimate that VIP turnover will decline by 20 per cent in FY17 with Chinese turnover down 30 per cent," the DB analysts write.
"We believe the market is now pricing in a 70 per cent reduction in VIP turnover and a 100 per cent decline in Chinese VIP turnover, which we view as excessive. A similar situation for the Korean casino operators in 2015 resulted in a 17 per cent decline in VIP turnover and a 31.5 per cent reduction in Chinese VIP turnover in the subsequent 12 month period."
The Deutsche team lower their price target on the stock to reflect the expected fall in earnings, to $13.75 from $14.35, but point out that the stock is trading well below that reduced valuation.
The also provide some more detail on the Korean experience:
"In June 2015, 13 gaming managers from the Korean casinos and 34 of their Chinese agents were arrested across Beijing, Hebei, Shanghai and Jiangsu for allegedly luring Chinese gamblers to foreigners-only casinos in South Korea.
"In the subsequent quarter, Chinese VIP turnover declined by 46 per cent with total VIP turnover down 29 per cent. In the subsequent 12 month period, Chinese VIP turnover declined by 31.5 per cent with total VIP turnover down 17 per cent.
"Crown could also experience some credit collection issues in the near term as its employees are in detention and the risks are that the impact is more pervasive across the VIP (junket and direct) and premium mass segments."
Shares are experiencing another soft start to the day's trade with a lack of conviction the main theme. The Aussie dollar has held at around 76.3 US cents this morning following a speech from the new RBA governor Philip Lowe, which suggested he was pretty comfortable with where the currency was trading.
Big miners and banks are mixed, and so is the ASX 200 overall, which is up a handful of points at 5393. Yesterday's biggest loser, Crown, is enjoying some support after Citi analysts said it looked oversold (see previous post) - the stock is 2.2 per cent higher.
Challenger is the early winner, climbing 4 per cent after providing an operational update that has pleased the market. Caltex's announcement that it will be bidding for Woolies' petrol stations has pushed the stock down 2.6 per cent.
Whether related to that bid or not, it's the supermarket owners who are giving the greatest support to the broader index, as Woolies and Wesfarmers add 0.7 per cent. The real estate stocks that were sold heavily yesterday are enjoying a little bounce, as Scentre Group climbs 0.8 per cent and Westfield 0.9 per cent.
Gold miners are doing well - Newcrest is up 1.4 per cent, while Regis, St Barbara and Evolution are among the best performing names this morning.
Tatts Group and Tabcorp shares have been placed into a trading halt, ahead of an announcement on "potential change of control".
The AFR's Street Talk column is reporting that the two gaming companies are re-visiting merger discussions held last year.
Tatts had brief talks with Tabcorp about combining the pair's businesses, which would have created a $10 billion wagering giant.
However, the pair failed to agree on an appropriate merger ratio, and Tatts and Tabcorp went back to their regular business.
It's understood Tatts' board and Tabcorp have been back considering their options and potential valuations, Street Talk says, adding sources said the pair were in talks and had not yet agreed a deal or a merger ratio.
The two companies' requests for trading halts were almost identically worded.
"The trading halt is requested pending the outcome of discussions in relation to a potential change of control transaction pursuant to a scheme of arrangement that is under consideration by Tabcorp," Tabcorp's statement to the ASX says.
Both Tabcorp and Tatts said the trading halt would remain in place until the beginning of trade on Wednesday.
One more on inflation: New Zealand consumer price growth slowed less than economists forecast in the third quarter, prompting the kiwi to jump.
Consumer prices rose 0.2 per cent in the third quarter, down from 0.4 per cent in the previous three months but more than the flat growth economists were predicting. Over the year, prices rose up just 0.2 per cent too, a bit higher than the forecast 0.1 per cent.
Economists expect RBNZ Governor Graeme Wheeler to respond to persistently weak inflation by cutting the official cash rate to a record-low 1.75 per cent at the next review on November 10, even amid an overheated housing market and economic growth that's among the developed world's fastest.
Annual inflation has been below 1 per cent for eight straight quarters and the RBNZ doesn't see it returning to the centre of its 1-3 per cent target band until mid-2018.
"Overall the third-quarter New Zealand inflation report reduces odds of more RBNZ rate cuts beyond November which will support kiwi in the near term," Elias Haddad, a senior currency strategist at CBA said. "A 25 basis point in November is virtually fully priced in our base case scenario."
Futures are pricing in an 80 per cent chance of a rate reduction in November down from 84 per cent Monday.
The currency rose as much as 0.7 per cent to 71.81 US cents, while the Aussie dollar slipped 0.5 per cent to $NZ1.0645..
Moving from the human aspect to the market angle of the Crown developments in China, Citi analysts are telling clients this morning to buy the stock following a 14 per cent plunge to $11.15 yesterday.
The analysts reckon investors have over-reacted to the news and say the stock is potentially oversold. Its trading up 2.4 per cent this morning at $11.42.
Citi said the recent events would be disruptive to Crown's VIP business over the next 12 to 18 months and now expect an 8 per cent decline in year-on-year VIP revenue for the 2017 financial year and 4 per cent in fiscal 2018.
"Our valuation and price target reduces to $15.10 from $15.35," the analysts told clients.
"We view today's price reaction as a potential over-reaction," they say, noting that the steep fall has "has effectively wiped out the value of Crown's entire VIP business".
"Given that we believe these issues largely relate to CWN's direct VIP business (i.e. we believe CWN's junket relationships will remain intact), which on our estimates represents around 4 per cent of CWN group EBITDA.
Citi expects Crown to given an update on its demerger plans at the annual general meeting later this week, along with a trading update.
Credit Suisse analysts, however, were more cautious, trimming their price target and reiterating their "neutral" call.
"This appears to be a Crown-specific issue," Credit Suisse's gaming team told clients.
"No other casino had staff taken into custody. We consider reputational risk results in a temporary avoidance of players and junkets to use Crown facilities followed by a multi-year recovery."
They reduce their target price for the stock to $12.30 to reflect a 15 per cent drop in FY18 VIP revenue, as they factor in "reputational risk as players and junkets potentially avoid CWN temporarily. Also, CWN may have to adjust its operations in China. Liquidity risk may increase."
Billionaire gaming mogul James Packer has broken his silence over the arrests of workers from his Crown Resorts casino business in China.
On Thursday, 18 Crown employees were arrested in China including three Australian citizens.
In a statement released this morning Mr Packer said that "as the major shareholder of Crown Resorts, I am deeply concerned for the welfare of those Crown employees detained in China"
Mr Packer said he had sought regular updates on the issue and had "asked Crown to do everything possible to contact our employees and to support their families, as we await further details from Chinese authorities".
"I am respectful, that these detentions have occurred in another country and are therefore subject to their sovereign rules and investigative processes.
"Crown will do whatever it can to support our employees and their families at this difficult time. Our number one priority is to be able to make contact and to ensure they are all safe."
The company held an emergency board meeting on Monday night and was briefed on the situation by Crown chief executive Rowen Craigie.
Fairfax Media has learnt that police are preparing to charge the 18 Crown employees arrested across China with organising gambling activities for mainland nationals overseas.
Sources familiar with the investigation told Fairfax Media the line of inquiry has focused on the sales and marketing activities of the 18 staff of James Packer's casino empire, and the inducement and facilitation for Chinese nationals to travel to Australia to gamble.
"Under our country's laws, it is not just gambling and opening casinos in China which fall under gambling crimes," said one source, who declined to be named because of the sensitivity of revealing aspects of an ongoing investigation. "If you organise or introduce our country's citizens to go overseas to gamble, if it's more than 10 people then you will face criminal liability."
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