Tue, Oct 09, 2018 - Page 10 News List

Macau’s ‘Golden Week’ run might come to an end as Chinese economy sputters


Macau’s robust “Golden Week” holiday performance is not likely to continue, with concerns over China’s softening economy weighing down the gambling outlook in the world’s biggest gaming center.

Chinese tourist arrivals in Macau for the week-long holiday that ended on Sunday jumped 14 percent from a year earlier, according to Macau government data.

Betting volume from high rollers was up more than 10 percent in the first six days of this month from the same period last year, Morgan Stanley analysts, led by Praveen Choudhary, wrote in a note.

Still, the casinos’ robust performance during the holiday is not removing analysts’ concerns that the industry would grow at a slower pace in the next few months amid a weakening macro economy in China.

The firm expects Macau gaming to grow 6 percent in the fourth quarter of this year, and lowered its forecasts for this year and next year.

Macau casinos were among the biggest decliners in Hong Kong yesterday.

Shares of Wynn Macau Ltd (永利澳門) fell as much as 6.8 percent, while Galaxy Entertainment Group Ltd (銀河娛樂) slumped as much as 6.1 percent.

The Bloomberg Intelligence gauge of Macau casino stocks has fallen more than 38 percent since reaching a May peak, outpacing the drop in the benchmark Hang Seng index.

“The Golden Week this year was very robust, better than our pre-holiday expectation,” said Andrew Lo (盧啟邦), executive director of Suncity Group Holdings Ltd (太陽城集團), the listed vehicle of Macau’s biggest junket operator. “For the fourth quarter and next year, we don’t expect the performance will be as ‘golden’ as last week.”

Although Suncity’s gaming revenue climbed 16 percent during the holiday week, Lo expects a drag from China’s slowing economy and stock market slump.

That was also echoed in Morgan Stanley’s reasoning in lowering its gaming revenue growth forecast to 13 percent from 16 percent for this year and cut next year’s gaming receipts growth to 5 percent from 12 percent.

Golden Week’s upbeat performance “may not continue for the remainder of the month,” the analysts wrote. “Macau in a slowing growth environment tends to underperform.”

In contrast to Macau, Golden Week did not deliver a huge payoff for China.

Consumption growth was softer than last year, and retail revenue growth might also underperform, according to a China International Capital Corp (中國國際金融) note.

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