Chips are down for Macau casinos amid Hong Kong protests, slowdown in mainland Chinese economy
- Sector’s gross gaming revenue fell 8.6 per cent in August
- Macau’s six casino companies have reported mixed results for first half of 2019
The immediate outlook for Macau’s casino sector looks grim, after gross gaming revenue fell 8.6 per cent in August – its biggest monthly drop since June 2016 – from US$3.3 billion in August 2018 to US$3 billion, according to the Macau Gaming Inspection and Coordination Bureau.
And the forthcoming Golden Week Holiday, which starts October 1, could point to how the rest of 2019 will pan out for the sector, said Andrew Chung, an analyst covering the gaming sector for Japanese investment bank Daiwa Securities.
“If the gross gaming revenue doesn’t hold up [during Golden Week], the China slowdown might be worse than everyone thought,” Chung said, adding that Daiwa was forecasting September’s gross gaming revenue to climb 3 per cent.
“If the gross gaming revenue holds up, we could be seeing flat to low single-digit growth for the rest of the year.”
He said long-term investors in Macau gaming stocks might take comfort in the growth of infrastructure, such as the Hong Kong-Zhuhai-Macau Bridge, which opened in October last year and made Hong Kong International Airport a “local” airport for Macau. Such infrastructure brings more visitors, which closely correlates to mass-market gaming revenue.
Macau’s tourism numbers, closely associated with mass gaming revenue, enjoyed 20 per cent growth between January and July this year over 2018, with 23.8 million visitors coming to Macau. Just over 3.5 million people arrived the mega bridge. Arrivals by ferry, on the other hand, dropped 36.5 per cent to four million during the same period.