Macau casino shares down 40 per cent since June as trade war deters Chinese high rollers

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Gross gaming revenue in Macau dropped by 17.3 per cent to a one-year low of 21.95 billion patacas (US$2.72 billion) in September. Photo: Bloomberg

Published: 4:30pm, 16 Oct 2018Updated: 12:04pm, 16 Jan 2019

China’s crackdown on corruption and investors’ fears over the impact of the trade war on the economy have sent the stock prices of Macau’s top six casinos tumbling an average of 40 per cent since June, bringing their valuations back down to reasonable levels.

But investors are not convinced the cheaper stocks are a sign that a reversal is on the cards, given expectations that many wealthy Chinese high rollers will continue to give Macau a miss as economic growth and the value of the yuan exchange rate weakens.

Gross gaming revenue in Macau dropped by 17.3 per cent from the previous month to a one-year low of 21.95 billion patacas (US$2.72 billion) in September, according to data from the city’s casino regulator, the Gaming Inspection and Coordination Bureau. Citigroup forecasts October gaming revenue to rebound to 28 billion patacas, when the temporary impact from Typhoon MangKhut has passed.

“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.”

Since becoming China’s president in 2013, Xi Jinping has led an anti-corruption campaign that has reached high profile executives at state-owned enterprises and private sector billionaires, that has sparked a rout in Macau casino stocks.