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Macau stocks down after poor August

Fri, Sep 6, 11:51am by Staff Writer

Macau casino stocks are trading lower after a poor August according to its gross gaming revenue report, amid ongoing protests in nearby Hong Kong.

Casino.org reports the world’s richest gaming hub saw its casino win tumble 8.6 per cent last month to $3.01 billion, down from $3.28 billion in the same month in 2018.

Gaming industry analysts were forecasting a gross gaming revenue decline of between two and six per cent.

With two-thirds of the year complete, Macau casino win is down two per cent to $24.5 billion.

The August financial report came on Sunday, and as a result, associated casino stocks slumped on Monday, the first day of trading following the news.

Hong Kong-listed Sands China, Wynn Macau, SJM Holdings and MGM China all fell between 1.5 per cent and 2.7 per cent – underperforming the index, which was down only 0.4 per cent in the same frame.

Last Tuesday wasn’t any kinder to Macau’s casino companies, which are hoping to weather an economic slowdown and an end to the ongoing protests in nearby Hong Kong.

Sands China dropped another 3.5 per cent, Wynn Macau 1.1 per cent and SJM 2.9 per cent.

MGM China did better than all of these though, down just 0.17 per cent.

Hong Kong tensions fuelling downturn

Hong Kong – now easily accessible to Macau via a 34-mile bridge spanning the Pearl River Delta – remains in a state of chaos.

Locals there are voicing their opposition against a stalled extradition bill that many view as the mainland China government gaining unreasonable power over the Special Administrative Region.

The unrest turned violent over the weekend and threatens to spread to Macau.

“Protests have become more violence and tense, heightening uncertainty over how all this will end,” BOCOM international analyst Philip Tse told Bloomberg.

“The impression among mainland Chinese that Hong Kong is not a pleasant place to travel, or even work or go to school, could be more lasting, and that will deal a substantial blow to the local economy.”

JP Morgan analyst DS Kim said to Reuters regarding the disappointing of the August gross gaming revenue report, “There is plenty to blame for the miss, such as social unrest in Hong Kong, tough year-on-year comparison, negative headlines around junkets and macro headwinds.”

President Donald Trump placed new 15 per cent tariffs on roughly $112 billion worth of Chinese imports, effective September 1.

China responded by threatening a lawsuit through the World Trade Organisation and additionally added its own new taxes on American imports.

While the odds once seemed long that China would use US casino operators licenced in Macau as bargaining tools, some believe the longer the trade war persists, the shorter those odds become.

Sands, MGM and Wynn are three of the six Macau casino permit holders.

All six concessions will expire in 2022.

“It would make a lot of sense to use the concessions as a retaliation if Trump goes ahead and escalates the trade war,” gaming industry consultant Ben Lee told Fortune.

“The outcome of the gaming concession re-tendering will be influenced and directed by Beijing, and the trade war will factor very highly in the process.”

In June, analysts at Sanford Bernstein opined, “We view the scenario where one or more of the US casino operators loses their gaming concession to be remote, unless the relationship sours significantly further into a Cold War environment.”


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