It “may take some time” still for mainland China authorities to resume same-day processing for Individual Visit Scheme (IVS) exit visas permitting mainland residents to visit Macau, says brokerage Sanford C. Bernstein Ltd.
Vitaly Umansky, Tianjiao Yu and Kelsey Zhu gave the commentary in a memo after Macau’s October gross gaming revenue (GGR) figures were released on Sunday.
The Sanford Bernstein team said it expected Macau’s overall visitor volume would “increase over the next months with a pickup in gaming visitors, as visa processing improves over time”.
“The key jump in visitors will come when visa processing becomes same-day and via e-kiosk again, which may take some time,” the institution added.
Mainland residents account in normal trading conditions for a majority of tourists to Macau. A number of investment analysts has suggested the return of electronic processing for IVS visas would be a catalyst for visitor numbers to Macau, and in likelihood for the city’s casino gross gaming revenue (GGR).
In-person application for IVS permits is reportedly being required since resumption on September 23 of IVS for all mainland residents. A number of analysts has said that this might so far have moderated the volume of such tourists to Macau, as the market looks for recovery from the effects of the Covid-19 pandemic.
At the weekend, Lao Ngai Leong, a Macau delegate to China’s National People’s Congress, had reiterated his suggestion that mainland authorities might consider resuming online applications for IVS permits.
On Sunday the Macau government said October GGR had risen 228.8 percent sequentially from September – coinciding with a return in IVS – although October GGR was still down 72.5 percent year-on-year.
“At this stage, we estimate November [GGR] to see a decline of approximately 60 percent” judged year-on-year, said Sanford Bernstein.
Its analysts added that a variable factor in the situation was “visa processing” and visitor volume, and “severity of any liquidity constraints” on junkets, “which remain largely uncertain”.
Golden Week and onward
Visitor arrivals to Macau during the entire autumn Golden Week holiday period this year – a Chinese holiday at the start of October – totalled 156,300, according to official data. The daily average of visitor arrivals during this year’s October holiday period stood at 19,538, down 86.0 percent from the prior-year period. The figures however are not directly comparable as this year’s holiday period included one more day compared with last year’s autumn Golden Week.
JP Morgan Securities (Asia Pacific) Ltd said in a memo after the October GGR numbers: “The recovery trend should continue for a while, since more players are regaining confidence in cross-border travel and can get access to a visa, which in turn allows us to keep our near-term forecasts.”
That institution’s analysts DS Kim, Derek Choi and Jeremy An anticipated Macau GGR to improve to MOP260 million (US$32.6 million) to MOP300 million per day in November, implying a 60 percent to 65 percent year-on-year decline, i.e., a further moderation of the rate of decline.
December might produce MOP350 million in GGR per day, suggesting the rate of year-on-year contraction might fall to 50 percent to 55 percent, they added.
“This implies fourth-quarter GGR can recover to about 35 percent of [average] pre-Covid[-19]levels, with mass recovering to 40 percent to 45 percent [of prior levels] and VIP to 25 percent to 30 percent,” wrote JP Morgan.
The institution added that for October, it estimated VIP contraction had been 80 percent year-on-year, whereas mass had “fared better,” at about a 70-percent contraction.
Deutsche Bank Securities Inc said in a Sunday memo that it was revising downward its forecast for fourth-quarter and full-year Macau GGR.
It now expects US$3.16 billion for the October to December period, i.e., a fall of 65 percent versus the same period in 2019; compared to the bank’s prior estimate of US$3.66 billion.
For full-year 2020, Deutsche Bank forecasts US$8.00 billion in GGR, i.e., down 78 percent year-on-year; from a prior estimate of US$8.49 billion.
