Investors in Macau stocks took some chips off the table yesterday, rattled by concerns about tighter macroeconomic policy on the mainland and the possibility of renewed visa restrictions on travel to the city.
Following a significant uptick in fourth-quarter inflation, economists now expect Beijing to take steps to stabilise prices by seeking to curb excess liquidity on the mainland. Gaming analysts say that would have a trickle-down impact on Macau, where monthly casino revenues since August have set records as credit-fuelled VIP gambling volumes soared on the back of loose lending.
'The key risk on Macau remains a significant contraction in liquidity,' CLSA Asia-Pacific Markets analyst Aaron Fischer wrote in a research note. 'Liquidity goes into Macau's VIP market just like it goes into the equity and property markets.'
Casino revenue in Macau rose 67 per cent from a year ago during the first 20 days of this month and could rise 50 per cent for the month, he said. That compares with 35.6 per cent year-on-year growth in the second half of last year and Fischer's forecast of 17 per cent growth for this year.
Macau's red-hot growth rate in recent months may trigger concerns in Beijing that the gaming industry is again overheating, and it raises the prospect of renewed visa restrictions on mainland travellers to the city.
Many industry executives and analysts believe Beijing would like to see 'GDP-plus' in Macau, where casino revenue expands at a rate slightly higher than the mainland's GDP growth rate, which was 10.7 per cent year on year in the fourth quarter.