The bad news keeps coming for Macau’s beleaguered casinos. Gross gaming revenue is in the doldrums, share prices have dwindled to multi-year lows, and now the theft of deposits from a promoter threatens to spook players and spur regulatory intervention. Has the sector hit rock bottom?
Macau’s gross gaming revenue for the first eight months of the year was 158.88 billion patacas, a year-on-year decline of 36.5 per cent. This is not just one bad year – the sector’s downturn dates back to the start of 2014.
September continues the trend. Last week’s daily run rate was 19 per cent down on the previous week and 18 per cent below the quarter-to-date average, prompting analysts at HSBC and CIMB to downgrade their monthly projections.
It is not unusual to see a lull ahead of October’s “golden week” national holiday. But analysts say this contraction is tied to news that 40 depositors of Wynn’s Dore junket told police that their deposits, totalling 400 million patacas, went missing earlier this month.
“This prompted others to withdraw deposits from various junkets,” said Karen Tang, an analyst at Deutsche Bank. “Junkets reduced lending to preserve cage cash to meet redemption demands.”
Tang says it is a common practice among junket operators to raise cage capital by issuing preferential shares with a preferred dividend yield of 1 to 2 per cent per month – referred to as “depositors”. These practices are now under the microscope of Macau’s Gaming Inspection and Coordination Bureau.