Weaker ringgit, rupiah having impact
Genting Singapore is bracing for the ripple effect of weakness in the Singapore and Chinese economies and weaker currencies in Malaysia and Indonesia, say analysts cited by the Asia Gaming Brief.
The depreciation of the ringgit and rupiah against Singapore’s dollar will negatively affect both VIP and mass markets for the unit, according to notes from both Union Gaming and Morgan Stanley.
“After being resilient for the past four years,” wrote Morgan Stanley, “Singapore gaming revenues (are) finally facing several issues. We expect 2015/16 Singapore GGR to decline 21 percent and 6 percent year-on-year to US$4.7 billion and US$4.5 billion respectively, versus our initial GGR estimate of US$5.2 billion and US$5.5 billion.”
It attributed the downgrade to lowered expectations for growth in Singapore, where the economy is now expected to grow 2.3 percent in 2015 and 2.8 in 2016 vs. previous estimates of 3.2 percent and 3.4 percent respectively.
Union Gaming has lowering its third-quarter estimates for Genting Singapore in the face of “continued currency headwinds,” AGB reported. The Malaysian ringgit and Indonesian rupiah recently have depreciated by more than 10 percent and 4 percent respectively compared to the Singapore dollar.
“These currency headwinds will negatively impact both VIP and mass market trends in the quarter, which will only be partially offset by a nearly 10 percent appreciation in the value of the Chinese Yuan Renminbi (CNY) relative to the SGD over the same time period, although the CNY strength will largely be applicable to only the VIP segment,” wrote Union Gaming analyst Grant Govertsen.
