Analyst: VIPs more cautious
China’s crackdown on corruption and investor concerns about a trade war with the United States have caused the stock prices of Macau’s top six casinos to drop 40 percent since June.
According to the city’s Gaming Inspection and Coordination Bureau, in September gross gaming revenues dropped 17.3 percent from the previous month to a one-year low of 21.95 billion patacas (US$2.72 billion). The South China Morning Post reports that Citigroup has forecast a rebound in October to 28 billion patacas.
“China’s economy is still uncertain, so the rich Chinese and the VIPs will stay relatively conservative,” said Kevin Leung, executive director of investment strategy at Haitong International Securities. “I am still waiting to see a big and sustainable improvement in gaming revenue.”
In a recent note, Morgan Stanley pointed out that both Wynn Macau and Galaxy Entertainment Group saw sluggish VIP revenues in the third quarter after benefiting from those visitors for the previous 12 to 18 months. It lowered its estimate for GGR growth from 16 percent to 13 percent this year, and from 12 percent to 5 percent for 2019, reported the South China Morning Post.
“Macau’s economy has succumbed to headwinds from trade tensions” with the U.S., said economist Carie Li of OCBC Wing Hang Bank. “This, combined with policy risks and higher borrowing costs, might have deterred high rollers from the gaming hub.”
GGRAsia reports that the gaming industry injected some MOP6 billion (US$743.21 million) into the local economy, according to data released by the city government’s Statistics and Census Service.
