It appears that December could be worse for gaming revenues in Macau than analysts had expecting in the face of an upcoming state visit by Chinese President Xi Jinping.
Though nothing official has been announced, Xi is expected to arrive on December 20 to celebrate the 20th anniversary of the territory’s return to China after nearly five centuries of Portuguese rule.
While it’s expected that Chinese high rollers will lay low during the visit𑁋and that there will be restrictions on travel from the mainland𑁋the Beijing government has imposed travel controls sooner than anticipated, a factor that is being cited as the main culprit in December’s slow start.
As it stands, the market has been reeling all year from a slump in VIP wagering, which analysts blame variously on the political turmoil in Hong Kong, the trade war with the U.S., slowing economic growth in China, recent weakness in the yuan against the dollar, and a retreat by the junkets that drive the VIP trade in the face of all these factors.
Last week, a trio of analysts at brokerage Sanford C Bernstein wrote to investors to revise downward their forecast for December from a year-on-year decline of 8 percent to 11 percent to a drop of 12 percent to 16 percent, citing the travel restrictions and the impact of lower hold at the high end compared to last December.
Vitaly Umansky, Eunice Lee and Kelsey Zhu estimated gaming revenues through the first eight days of December at MOP$5.7 billion (US$707 million), down 16 percent from 2018 and down 6 percent from November, which fell short of 2018’s performance by 8.5 percent and is the year’s second-worst revenue month to date.
Both the mass market and VIP are trending lower, they said, the former in the low single-digit range, the latter in the low 30s.
“Visa limitations/restrictions on (the Individual Visit Scheme) and transit visas are impacting higher-frequency higher-end players in both VIP and mass along with junket agents, which has led to significant declines in high-end visitation and (gross gaming revenue),” the analysts wrote.
The VIP hold rate is around the “normal” range, they said, but lower than in December 2018, when the casinos played especially lucky.
Nomura Instinet’s analysts believe the first eight days may have been even worse, blaming the visa restrictions as a key contributor to their estimate of minus-19 percent year on year and minus-7 percent versus November.
Against a tough comp with December 2018’s 16.6 percent increase, analysts Harry Curtis, Daniel Adam and Brian Dobson said last week that Xi’s visit would “likely have a more negative impact on visitation and (gaming revenue) than expected.”
