High rollers ensure Macau still firing on all cylinders
Macau's casinos posted a 32.9 percent year-on-year rise in gambling revenue last month, as high rollers continued to throng the high-stakes baccarat tables.
While the casino take is typically soft in November, which falls between the holiday months of October and December, in absolute terms last month's 23.06 billion patacas ranked as the city's fifth-best month on record.
Still, the growth rate of 32.9 per cent represented Macau's slowest pace of expansion since August 2009, due to strong growth in the final months of last year.
In the first 11 months of the year, Macau casino revenue rose 44 per cent to 244.26 billion patacas, or US$29.9 billion-about as much as Las Vegas Strip casinos booked in the five years from 2006 to last year.
Melco Crown Entertainment co-chairman Lawrence Ho Yau-lung said this week Macau's casino yearly revenue growth rates of 40-50 per cent were 'unsustainable'.
Ho expects growth to slow to 15-20 per cent next year, an estimate in line with most analysts' projections, as regional economies slow and Macau starts to encounter the problem of growth-on-growth.
Despite recent reports of rising bad debts on the mainland, especially in the underground lending market centred in the eastern city of Wenzhou, gaming industry executives say they have not seen any sign that Macau's VIP junket agents are pulling back on credit.
Junkets are the middlemen who bring mostly mainland high-stakes players to casinos, issue them credit and collect their gambling debts in exchange for hefty commissions.
Junkets dominate the credit-driven VIP baccarat segment, which accounts for more than 70 per cent of total casino revenue in the year to date.
Mass market revenues, too, continue holding up well as mainland visitors continue flooding into the enclave. Visitor arrivals from the mainland rose 30.5 per cent in October to 1.47 million. Mainland arrivals were up 20.9 per cent in the first 10 months, to 13.22 million, accounting for 57 per cent of all visitors to the city.
Analysts said Wednesday's move by the People's Bank of China to cut the required reserve ratio for banks was likely to boost investor sentiment towards shares in Macau casino operators, but its impact on actual revenue growth would be limited.
The move will boost liquidity in the banking system and marks an about-face from almost three years of monetary policy tightening.
'We suspect that this reversal in policy could have a greater impact on sentiment than on market forces,' Union Gaming Macau analyst Grant Govertsen wrote yesterday in a research note.