Analysts warn of too much confidence
Gaming revenues in Macau increased 16.3 percent in April, extending the city’s winning streak for a ninth straight month. The local Gaming Inspection and Coordination Bureau reported total revenues of MOP20.16 billion (US$2.5 billion). Year-to-date, the total is MOP83.64 billion, up 13.8 percent over the same period last year, reported CalvinAyre.com.
Both mass-market and VIP gaming showed signs of improvement, but a new report from brokerage Sanford C. Bernstein linked the more robust returns to a drop in high-profile corruption arrests. In the aftermath of a 26-month recession, sparked by a Chinese government crackdown on graft and money laundering, Bernstein warned Macau gamblers and casino operators not to relax too much. Nomura analysts also issued a note warning that rising customer deposits with Macau junket operators have “started to attract the attention of government regulators.”
The DICJ recently began an audit of about half of Macau’s 126 licensed junket operators, reported GGRAsia. Nomura warned the audits could prevent some customers from making additional deposits, which could negatively impact VIP play at Macau casinos in the short term.
Bernstein says a possible tightening of consumer liquidity in China in the second half of 2017 could also affect VIP play. Its report stated, “Given the correlations between high-end spending and liquidity, we suspect monetary tightening in China may come to represent a headwind for demand in some of our sectors over time (notably in autos and gaming). For now though, China’s moneyed class appear to be living the dream.”
Sands China Ltd. Chairman Sheldon Adelson seemed unfazed by the audits in the first-quarter conference call. “I think the Macau government is being prudent,” he told analysts. “They don’t want any repeat of what happened before. And I take my hat off and I salute the Macau government for doing so.”
Robert Goldstein, president and chief operating officer of Las Vegas Sands Corp., parent of Sands China, added, “I don’t think in the end it’s going to be that impactful.”
