The year-on-year decline in casino gross gaming revenue (GGR) in Macau “shouldn’t surprise anyone” as border restrictions continue to limit the number of visitors to the city, say a number of investment analysts.
Macau casino GGR declined by 97.0 percent in June in year-on-year terms, to MOP716 million (US$89.7 million), according to official data released on Wednesday. It was the lowest monthly figure since the liberalisation of the market in 2002, showed official data.
“The border closure remains in place which has continued to limit visitation and revenue. GGR [in June] was driven by a very small number of players, which drove significant volatility especially in the VIP segment,” said a Wednesday note from Sanford C. Bernstein Ltd.
According to the brokerage, while there has been “some minor loosening of border crossings, restrictions to visitation are still largely in place.”
Travel between Macau and Hong Kong is still subject ordinarily to a 14-day quarantine period in each direction. The majority of mainlanders entering Macau has no quarantine restrictions, but those wishing to return to the mainland after a visit to Macau are currently subject to a 14-day quarantine requirement.
In addition, there are restrictions in the issuance of visas by the Chinese authorities for mainlanders to travel to Macau, including of visas under the Individual Visit Scheme (IVS), allowing mainland residents from selected cities to travel independently to Macau and some other places.
The mainland and Hong Kong are usually key markets for supplying gamblers for Macau casinos.
Macau legislator and scholar Davis Fong Ka Chio told local reporters on Thursday that he believed that the city’s monthly casino GGR could reach about MOP8 billion once border restrictions between Macau and neighbouring Guangdong province, in mainland China, are eased.
The tally of visitor arrivals to Macau in May declined by 99.5 percent year-on-year to 16,133, according to data from the city’s Statistics and Census Service.
JP Morgan Securities (Asia Pacific) Ltd said in a Wednesday memo that the “visibility on the timing, pace and scale of the border reopening remains frustratingly low, and this frustration is shared by every operator and junket that we talk to.”
“Notwithstanding multiple delays and disappointments, we still hope that a ‘Greater Bay travel bubble’ arrangement could be announced soon in coming weeks (if not days), but the devil will be in the details,” it added.
The Hong Kong government announced on Tuesday that it had extended to August 7 its deadline for the end of a 14-day quarantine rule for arrivals from Macau, mainland China and Taiwan. In a press briefing on Wednesday, an official from the Macau government said the extension of such quarantine measures in Hong Kong would not impact the progress of negotiations regarding easing border restrictions.
Following the release of the June GGR figures, Deutsche Bank Securities Inc said it was updating its forecasts for the Macau gaming market.
The brokerage said it now expected the city’s casino industry to record US$5.27 billion in GGR for the third quarter. Annual revenue for full-year 2020 was now expected to reach US$16.87 billion, down from an earlier forecast of US$19.38 billion. That would mean a decline of nearly 54 percent from the GGR achieved in full-year 2019.
(Updated at 8:50am, July 3)
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”The travel/border policy between mainland China and Macau will fully normalise by the end of September (i.e., before the all-important October Golden Week)”
DS Kim, Derek Choi and Jeremy An
Analysts at JP Morgan Securities