Could the Hong Kong Jockey Club's famed tote holds be the new “Big Mac index”?
And if that is the case, are Joao Moreira’s mounts the equine equivalent of Apple shares – in-demand, seemingly delivering time and again, but so ridiculously popular it is impossible to get any value?
And how is it that Jockey Club turnover is up through the first three meetings of the season in the midst of China's recent stockmarket crash – dubbed the Great Fall of China – and subsequent economic uncertainty?
The answer could be the still-surprising commingling figures – but back to that shortly.
First: fast food.
The Big Mac Index was invented by The Economist magazine in the 1980s as a fun way to measure purchasing power – the price of a Big Mac, measured against market exchange rates of respective countries, meant to provide a “street level” guide of how an economy is performing.
“Burgernomics” might not be for everybody, so what about the much-discussed Jockey Club handle – does it really reflect what happens on stock markets?
On face value so far this season, it doesn't seem so, but dig a little deeper and it's clear the local punters are feeling the pinch.
Looking at the three meeting-to-meeting comparisons so far this season it would seem the Jockey Club betting has been surprisingly robust – or “resilient”, as CEO Winfried Engelbrecht-Bresges described it after a season opener that netted over HK$1.1 billion, up 1 per cent on last year.
The numbers are surprising because of what preceded the season, in particular a dramatic day on the Chinese stock market less than two weeks before the season opener, unimaginatively dubbed Black Monday.
The Shanghai Stock Exchange lost more than 8 per cent of its value, the worst single day loss in eight years, the dark day just one of many among a few months of disastrous twists, turns and government intervention.
Dabbling on the stock market is at its most basic level gambling, and as much as the people on Wall Street would love to differentiate themselves from the bloke in the betting shop, a simple correlation between a punt on the ponies and looking to buying some blue chips can easily be made.
The stock market and totalisator betting both have many characteristics that form the basis of “perfect competition theory”: for a start, easy access for large numbers of participants with extensive market knowledge.
So similar are the markets that the Jockey Club has even used American company Longitude's complex technology to create the revolutionary single-pool wagering, technology that was first developed to underpin financial markets.
Prices dictated by supply and demand, driven by macro and micro factors – it's all risk and reward. White collar types call it investing, the blue collar types lining up at the windows just get real and see it for what it is – a bet.
But it isn't the HK$10 quinella place punter that fills the Jockey Club coffers. We aren't privy to the details on the Jockey Club's customer database, but it is safe to say that high rollers pour in significantly more than the equivalent of “mom and pop investors”, as they would say in the US.
So while the effects of the China crash may not have trickled down to the man on the street just yet, the big players are already affected, and the “resilient” numbers are just that – resilient, but not really rising as they have been spectacularly for nearly a decade now.
It is obvious that the financial climate affects the tote holds – a quick look at the graph marking annual Jockey Club turnover tells you that. Standing out like a sore thumb in an otherwise steady climb to Mount Everest is a Grand Canyon-like drop-off right around 2008, coinciding with the Global Financial Crisis.
Despite the apparent correlation between the stock market and the betting handle, it is Gross Domestic Product that Jockey Club officials look to as a strong indicator for consumer confidence, with of course GDP and other indicators being inextricably linked.
Maybe we should be asking mega-rich owner Pan Sutong for some ideas on the similarities between betting and shares. It has become simply impossible to back any of his horses. Giant Treasure was yet another one of his runners to be backed off the map on Sunday, jumping a skinny even-money favourite.
But whatever pain followers were feeling when the grey finished unplaced, spare a thought for Pan, who had the share price of his Goldin Properties plunge by nearly 60 per cent in a single day, almost US$14 billion of his net worth vanishing into thin air.
So what next? Sunday's figures again looked encouraging in the face of doom and gloom, but a word of caution came from officials.
Even though total turnover was up – from HK$1.219 billion to HK$1.235 billion year upon year – the difference maker didn't come from Hong Kong.
Making those numbers look prettier is the growth in commingling figures, boosted by the introduction of Singapore in the past 12 months, and up from HK$22 million to HK$46 million for the corresponding meeting.
New South Wales and the European totes are still to get involved in commingling, which will provide another mini-boost, but expect that growth to smooth out soon.
Maybe this crisis isn't as all-consuming and far reaching for the club as 2008, but it is still making a dent.
Still, for the best of both worlds – fast food and punters – it might still pay to check on the price of a Big Mac in the Sha Tin food court.
