Why are analysts raising a red flag over Genting Singapore?

Failure to pass Japan's casino bill would send stock prices plummeting.

OCBC Investment Research has estimated that Genting Singapore’s stock price has shot up 10% since Nov 14, attributable to increased interest in the potential passing of Japan’s casino bill.

The research house cautioned though that there are a few considerations to note.

"While we recognize that the passing of the bill could potentially catapult the stock to higher price levels, we also believe that the failure to pass the bill would precipitate a sharp downside," it warned.

In light of these binary outcomes, OCBC Investment Research 'strongly' advises investors to remain cautious when trading the stock.

Here are what to consider according to OCBC:

First is the amount of time left in Japan’s extraordinary Diet Session. The current session is set to end 30 Nov, though there remains a possibility of extending the Diet Session by one or two weeks.

Do note that, according to news reports, it seems that it is possible for the minority party to block the debate of the casino bill from being added to the official legislative calendar.

Second is the Liberal Democratic Party (LDP) majority. If the casino bill is successfully added to the lower house calendar, the ruling LDP could force the passage of the bill. However, such an unpartisan move would further erode Abe’s already diminished political credit; Abe has already received much flak for forcing through the Trans-Pacific Partnership (TPP) in the lower house only to have Trump re-affirm his intention for US to leave the TPP.

Third is Abe’s economic ambitions. Abe may be even more reliant than before on the enactment of the casino bill to achieve his economic outcomes, with the TPP in jeopardy after Trump’s anti-TPP statements.

Fourth is the competition to receive the license. Even if the bill is passed, GS has to beat several other international casino players to win the license.