Gaming revenue in Macau is headed for its first annual decline in three years as economic headwinds from China continue to buffet the world’s wealthiest casino market.
The latest sign was November’s 8.5 percent fall-off from the same month last year, which was better than the 10 percent to 13 percent drop analysts expected. Then again, only August’s 8.6 percent decline was worse as the year heads to a close.
In 2017 and 2018, gaming revenues in Macau shot up following a three-year slump triggered by a Chinese crackdown on corruption and lavish spending by officials of the ruling Communist Party and state-owned enterprises.
That expansion is not expected to continue. The market is battling a near-perfect storm with a Chinese economy facing its slowest growth since the 1990s, a damaging trade war with the U.S., and a weakening yuan that’s diluting gamblers’ spending power. A government crackdown on cross-border gambling is hurting the junkets that control the VIP sector. And it now appears that the ongoing political protests in Hong Kong are disrupting travel more than anyone realized. Jefferies analyst Andrew Lee, for one, said the turmoil there is becoming an issue for Chinese visitation from outside Guangdong and high-end business trips are being cancelled.
Gaming revenue is down 2.4 percent year to date, and for all these reasons December is not likely to reverse the trend. It’s expected also that high rollers from the mainland will be scarce on the ground, anxious to keep a low profile when President Xi Jinping makes a state visit to Macau to celebrate the 20th anniversary of the city’s 1999 repatriation to China after 500 years of Portuguese rule.
It’s not helping that Beijing acted earlier than expected to tighten controls on visitation from the mainland ahead of Xi’s visit, which is scheduled for December 20 to coincide with the inauguration of Ho Iat Seng as the territory’s new chief executive, another official event that promises to be anything but conducive to displays of wealth at the baccarat tables.
Citing gaming industry sources, analysts with Credit Suisse said the restrictions will limit travelers on the individual visit scheme and package tour visas to only one trip prior to December 20. “Overall, we believe the control would impact the VIP and premium mass players who visit Macau more frequently,” they said.
Stifel Financial analyst Steven Wieczynski said in a client note he wouldn’t be surprised to see a decline of up to 12 percent. “December,” he wrote, “is going to be a mess of a month.”
In related news, Ho Iat Seng’s regime is preparing to take the reins in Macau, notably with new names in the key ministries in charge of justice and the economy. Ho, a businessman and long-time legislator, has chosen an administration that appears intended to represent a break with the past.
Foremost among them is the new secretary of Economy and Finance, Lei Wai Nong. He replaces Lionel Leong, who had served since 2014 as head of arguably the second most powerful position in the government in its role as principal liaison with the city’s largest industry and taxpayer, the casinos.
The appointment was greeted with surprise by some observers, who noted that the Fujian-born Lei, a long-time government staffer and current vice president of the Executive Council of the Municipal Affairs Bureau, will be the first economy secretary since Macau’s handover from Portugal not to have worked in relevant private-sector businesses.
“He has no experience in economic development in Macau or in the casino industry,” noted Larry So, a political commentator and former associate professor at Macau Polytechnic Institute, in an interview with Reuters.
“It seems that Mr. Ho wanted to pick someone with a fresh outlook.”
In all, 10 new cabinet members, nine men and one woman, will be sworn in this month with Ho.
Commissioner Against Corruption Cheong Weng Chun will be the new secretary of Administration and Justice. Chan Tsz King will succeed him in his former post. Ip Son Sang will be prosecutor-general; Leong Man Cheong will head the Unitary Police as commissioner-general; Vong Man Chong will be director-general of the Macao Customs Service; and Ao Ieong Iu will head the department of Social Affairs and Culture.
The one high-profile returning name is Raimundo Do Rosario, who will remain secretary of Transport and Public Works. Also returning is Wong Sio Chak as secretary of Security.
