Macau casino gross gaming revenue (GGR) is likely to shrink by 8 percent year-on-year in the fourth quarter, driven by an anticipated 26-percent decline in VIP, mitigated by a 6 percent to 7 percent expansion of mass-play revenue, said a Tuesday report from brokerage JP Morgan Securities (Asia-Pacific) Ltd.
In the third quarter this year, VIP baccarat revenue as a proportion of all casino GGR stood at 43.9 percent, according to market-structure data released last week by the Macau government. In the second quarter, it had been 47.2 percent.
Macau VIP baccarat GGR fell by 22.5 percent year-on-year in the third quarter according to the data released last week.
JP Morgan said in its latest take on Macau – a lookahead on third-quarter earnings and an overview of the fourth quarter and beyond – that there had been “signs of VIP stabilisation” since September this year.
The “confidence” of VIP agents and VIP players “seems to be improving when looking at key metrics – e.g., the frequency of visit, level of deposits, etc. – at major junkets,” wrote analysts DS Kim, Jeremy An and Derek Choi.
Nonetheless JP Morgan expected “GGR momentum to get worse before getting better” in Macau, followed by a “flat first quarter and positive prints from April onwards”.
Another brokerage, Sanford C. Bernstein Ltd, had said in a September 25 note regarding the Macau casino sector’s outlook in the fourth quarter: “Hong Kong protests and [President] Xi’s visit in December matter some, but the soft economy is primary reason for GGR sluggishness.”
A number of commentators has speculated that President Xi Jinping will visit Macau in December to mark the 20th anniversary of Macau’s handover from Portuguese administration to that of China, although no announcement has been made on the topic. Some observers have noted that any visits to Macau by members of China’s senior leadership tend to depress casino play among mainland Chinese visitors, people who make up a large majority of tourists to the city.
Banking group Morgan Stanley suggested in an October 13 memo that Macau casino GGR was likely to shrink in every month of the fourth quarter, when judged year-on-year.
