Analyst: Reasons to be bullish
A newly released plan by China’s central government to integrate the mainland’s Guangdong Province with Macau and Hong Kong has been interpreted as a positive for both, says Grant Govertsen of Union Gaming Securities Asia Ltd.
Govertsen told GGRAsia that the Outline Development Plan for the Guangdong-Hong Kong-Macao Greater Bay Area is a firm indication that Beijing is committed to Macau’s ongoing success.
“Ultimately, it is the arrival of visitors that will drive the growth of Macau, and effectively combining Macau into the other jurisdictions of the Greater Bay Area can only result in significantly more visitation in the out years,” Govertsen said. “This is exactly why it is almost impossible to not be bullish on the long-term story in Macau.”
In January, the city’s Statistics and Census Service announced nearly 36 million visitors came to Macau in 2018; that number is likely to grow with the recent opening of the Hong Kong-Macau-Zhuhai Bridge. The city just concluded a successful Golden Week celebration, in which visitor arrivals increased 26.6 percent from 2018 and passing the 1 million mark for the first time.
CCTV reported that the Beijing plan, released on February 18 by the Central Committee of the Communist Party of China and the State Council, aims to develop the region into “a role model of high-quality development.” It cited an official of the government who called it “a national strategy General Secretary Xi Jinping has planned for, made decisions about and promoted in person.”
The Greater Bay Area consists of the two special administrative regions, Hong Kong and Macau, and nine cities in Guangdong Province: Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing.
“As one of the most open and economically vibrant regions in China, the Greater Bay Area plays a significant strategic role in the overall development of the country,” according to the plan, which envisions the bay area developing into a center of technical innovation and an important part of China’s Belt and Road Initiative.
The plan lays out short-term and long-term goals. By 2022, according to CCTV, “the framework should essentially be formed for an international first-class bay area and world-class city cluster that is vibrant and highly innovative with an optimized industrial structure, a smooth flow of various factors and a pleasant ecological environment.
“By 2035, the bay area should have an economic system and a mode of development mainly supported by innovation, with its economic and technological strengths vastly increased and its international competitiveness and influence further strengthened.”
The People’s Daily saluted the plan, saying the Chinese must “free our minds, make active explorations and bold trials, and strive to play a pioneering role.” The governments of both Hong Kong and Macau issued statements hailing the plan.
“Bay areas play a big role in global economic powerhouses such as the United States and Japan,” said Liang Haiming, head of the China Silk Road iValley Research Institute. “China’s bay area will become a world-leading one and demonstrate the vitality of our systems.”
And Ip Kuai Peng, pro-rector of the City University of Macau, added, “The high degree of resource flow and integration in the area will truly enhance the well-being of Macau residents. For example, the ‘one-hour living circle’ will greatly facilitate the life and employment of bay area residents.”
Meanwhile, according to Asia Gaming Brief, the jury is out on whether Beijing’s crackdown on illegal forex trading will have any effect on Macau’s No. 1 industry. Effective February 1, illegal forex trading became a criminal offense; violators could face jail terms of five years or more and fines up to five times the ill-gotten gains.
Bernstein analysts say the impact on Macau gaming will depend on how strictly the new rule is enforced. “If the rules are all strictly enforced and the scope of government action against all forms of money movement is deep and broad, the impact would be severe, not only for Macau but for the HK real estate market and for many Chinese companies that shift funds offshore.”
In Govertsen’s view, “Despite negative recent headlines (i.e. capital controls), the reality is that Beijing wants and needs Macau to succeed, and the government will stop at nothing to ensure this.”
