A second case of the mysterious and potentially deadly coronavirus was confirmed in Macau last week, dealing another blow to the city’s slumping casino industry. It took place just on the eve of the Lunar New Year holiday, one of the biggest tourism and gambling events of the year.
Macau Chief Executive Ho Iat Seng responded to the second case with a press conference on January 24, the day before the holiday’s start, announcing that all planned large-scale public events for the weeklong celebration were being canceled indefinitely.
Ho urged local organizations to cancel their events as well, and advised residents to stay home during what is traditionally China’s biggest travel season of the year. The chief executive, who took office on December 20, said the city should “prepare for the worst.”
He said also he would not rule out the possibility of suspending casino operations should the situation worsen, capping a week that saw the city’s Hong Kong-listed gaming stocks hammered by an average of 10 percent. Shares of the U.S.-listed parents of three of those companies, MGM Resorts International, Las Vegas Sands and Wynn Resorts, also tumbled. All three derive the majority of their revenues from Macau.
The city’s Gaming Inspection and Coordination Bureau (DICJ), meanwhile, has asked operators to reinforce preventive measures at their properties, and the government has extended body-temperature scanning to all 405 public entrances and 47 staff entrances in the city’s 39 casinos.
Given the unfortunate timing, the fear, said Macquarie Securities gaming analyst Edward Engel in a report cited by CDC Gaming Reports, is that the virus will spread “exponentially.” Last week, China had confirmed 619 cases of coronavirus, with the death toll amounting to 17 people, reported mainland business news outlet Caixin.
“In the coming weeks, over 1 billion travel movements are expected in Greater China, creating risk of a more lasting impact on China travel,” Engel warned.
If a casino closure is imposed, it would be only the second since the territory’s modern-day market was created in 2002, when its current six concessions were awarded. The first closure was in September 2018, in response to the ravages of Typhoon Mangkhut.
The second case of the virus was detected at the main Gongbei border crossing with China by one of the hundreds of body-temperature scanners now being applied to all visitors from the mainland. The victim was reported to be a 66-year-old man visiting from Wuhan, the mainland city of 11 million, where the virus is believed to have originated at a poultry and seafood market. He was sent to a local hospital, where tests confirmed the disease.
The first victim was a 52-year-old woman, also from Wuhan, who arrived in Macau via the Gongbei crossing last Sunday. She was reported to be staying at the New Orient Landmark Hotel when she fell ill and sought medical attention several days after arriving.
More than 600 cases were reported across East Asia last week, most of them in and around Wuhan, 18 of them fatal, although research by Northeastern University in Boston and Imperial College London cited by the New York Times suggests the real number of cases may be five or 10 times higher. Cases have been confirmed in Hong Kong, South Korea, Japan, Thailand, Singapore and Vietnam, in addition to Macau. Last week, the first case in the United States, in the state of Washington, was reported.
China has since confirmed that the virus can be spread by human contact, prompting the cancellation of New Year’s celebrations across the country, including in Beijing, and travel warnings were issued in cities nationwide. On the day of Ho’s Macau press conference, authorities took the extraordinary step of closing off Wuhan, canceling planes and trains leaving the city, and suspending buses, subways and ferries within it. They also planned to restrict travel from nearby cities in an attempt to quarantine around 25 million people and hopefully stem the virus’ spread.
The outbreak has led the International Monetary Fund to lower its forecast for global economic growth, and it’s been reported that the World Health Organization was considering declaring an international public health emergency, as it did with swine flu and Ebola.
The big unknown for Macau last week was how the disease might affect the market’s ability to bounce back from 2019’s 3.4 percent gaming revenue decline.
Engel noted that visitation declined for more than a month after the outbreak of the H1N1 Swine Flu in 2009.
The illness also is being compared to the SARS epidemic that killed more than 700 people in 30 countries in 2002 and 2003, and posed enough of a threat to Macau’s then-fledgling casino market to prompt Beijing to open up travel from the mainland once the outbreak had subsided. That decision had the unintended effect of sparking a decade-long boom that transformed the tiny city into the largest gambling market in the world.
“There’s risk mass growth could come in even lower as net rooms growth will be essentially flat and hotel occupancies have surpassed Vegas, with the (Macau Government Tourism Office) suggesting last week that visitation could decline in 2020,” Morgan Allen gaming analyst Thomas Allen warned investors in a research note cited by Reuters.
Certainly, it’s not looking good for share prices either.
Charlie Ripley, senior market strategist for Allianz Investment Management in Minneapolis, told the news agency: “We’re seeing headline risk introduced to the market, and any time there’s new uncertainties we see more volatility and flight to quality and investors fleeing risk assets.”
