Uncertainty about the potential macroeconomic impact of the U.S.-China trade-tariff war – despite recent de-escalation – keeps UBS Investment Bank cautious for now on the Macau gaming sector, suggested the institution’s Hong Kong strategy and Asia gaming analyst Angus Chan, in Tuesday commentary.
His remarks were in response to a GGRAsia question at a UBS Asian Investment Conference 2025 session held in Hong Kong, about the bank’s equities-related investment strategy for Asia and Hong Kong.
Mr Chan noted: “We downgraded the growth forecast,” for Macau gaming, “in April, and subsequently this de-escalation of trade war [happened].”
It was announced on May 12 that U.S. levies on Chinese goods would drop from at least 145 percent that had been announced by the administration of U.S. president Donald Trump, to a base levy of 30 percent for an initial period of 90 days. Chinese levies on U.S. goods were to fall from at least 125 percent, to 10 percent.
Mainland China is Macau’s main feeder market for general tourists and for its casino players, and is a major exporter of manufactured goods to the U.S. and other rich-world markets.
UBS analyst Mr Chan observed of the Macau gaming sector’s outlook: “It’s swinging a little bit to our upside scenario at the moment.
“But I guess the uncertainty still remains and I think if we do get further de-escalation to the extent [of] even [a] trade deal, then obviously there’s upside to our estimates,” he added.
Currently, UBS is “assuming a relatively hawkish environment in the trade war situation,” said Mr Chan.
In late April commentary, UBS said it had moderated its oulook on the Macau gaming sector amid the tariff row, on the basis it was “indirectly hurting demand” for the city’s casino services, in the words of Mr Chan at the time.
In that commentary, UBS suggested a historically-high positive correlation between China’s exports and Macau’s gaming revenue performance.
At that time, the investment bank’cut its forecast for the mainland’s gross domestic product (GDP) and for its exports.
It then estimated that Macau’s gross gaming revenue (GGR) could decline by 2 percent year-on-year in 2025, versus the previous expectation of 3-percent growth. Additionally, it had thought the Macau gaming sector’s 2025 earnings before interest, taxation, depreciation and amortisation (EBITDA) might fall 8 percent year-on-year.
But currently for Macau gaming, “short-term wise, we’re seeing fundamentals being quite stable,” said Mr Chan.
Macau’s GGR growth in April and May had also been tracking at a level that was “better than expected”, Mr Chan noted.
Macau’s GGR in April rose 1.7 percent year-on-year to MOP18.86 billion (US$2.36 billion), according to data from the city’s Gaming Inspection and Coordination Bureau.
The city’s May GGR might achieve “mid-single-digit” growth, Mr Chan observed in his Tuesday remarks.
“From here on, we do need the outcomes of the trade situation, and that outcome should be sometime in July. So in the meantime, we are just staying cautious” on the Macau gaming sector, the UBS analyst said.
