Across client accounts that have selected the ‘Growth’ Australian equity option we have sold Crown. Since the release of its 1H17 results the company’s share price has significantly outperformed the broader market (it now trades on a 5-year high PE relative to the ASX200), given a renewed focus by management on costs and a simplified business structure which refocuses on domestic assets.

While the sale of its interest Melco Crown Entertainment has strengthened the balance sheet and reduces earnings volatility, it also removes exposure to growth in Macau with Crown now primarily exposed to the highly regulated and mature Australian casino market. Recent trading updates from peers have however been soft, the company experienced a decline in Victorian electronic gaming machine revenue in 1Q17 and the latest employment data continues to signal lacklustre demand for labour and record low wage growth which increases the risk of weaker than expected main floor gaming trends near term.

We are currently assessing several alternatives as a replacement for Crown, and with investors starting to fret over possible political turmoil in the United States after an extended period of calm in global markets, we believe now is an opportune time to raise cash in anticipation of that purchase. As always, we will communicate the purchase decision as soon as it is finalized