Earlier-than-expected visa controls imposed in the fourth quarter by mainland China authorities on mainland residents heading to Macau could “dampen the demand” for the city’s premium mass and VIP play for November and December, said Credit Suisse AG in a Wednesday report. Visa controls have been tightened ahead of the 20th anniversary in late December of Macau’s handover; in likelihood because of expected visits by China government officials, suggested the brokerage.
Credit Suisse’s report cited industry sources as saying that mainland authorities were applying “temporary” administrative controls in the period from “November 22 to December 20”, in order to “limit the traffic” to Macau “ahead of the China government officials’ visit to Macau for the 20th anniversary”. Macau is hosting celebration events in December for the 20th anniversary of the handover of the city from Portuguese administration to that of China.
“Specifically, from our understanding, players coming to Macau through the individual visitor scheme (IVS) or packaged tour visa can come only once during the period (November 22 to December 20),” wrote Credit Suisse (Hong Kong) Ltd’s analysts Kenneth Fong, Lok Kan Chan and Rebecca Law in the report, citing discussion with industry sources.
The memo added: “Tourists who had applied for the IVS or package tour to Macau in the past one month are not allowed to reapply [for] such visas.”
The IVS visa system allows mainland Chinese living in eligible areas of the mainland – typically the most economically developed places – to apply for a travel permit to visit Macau or Hong Kong as independent travellers rather than as part of a tour group. The number of mainland cities under the scheme currently stands at 49.
“Moreover, the visitors who had applied for the IVS or package tour entering Macau in the past one month (October 22 to November 22) are not allowed to re-apply for such visas,” said the Credit Suisse team. The note added that Chinese visitors could still use a transit visa to come to Macau, but such application would require a valid flight ticket to an onward destination.
Xi visit speculation
In Wednesday’s memo, the Credit Suisse analysts said that the visa control measures had come “earlier” than expected. “While we previously expected there would be a control starting in mid-December, the implementation is now earlier than our expectation,” the analysts stated.
They added: “Overall, we believe the control would impact the VIP and premium mass players who visit Macau more frequently. Large [-value] players may also avoid to visit during this sensitive period.”
The Credit Suisse team expressed a cautious view on the outlook near-term for the city’s gaming earnings. Gross gaming revenue (GGR) in Macau “is so far tracking an 8 to 10 percent year-on-year decline for November,” stated Credit Suisse. “That said, we still see low market expectation and undemanding valuation with stable fundamentals as drivers for 2020,” added the institution.
In an emailed reply to GGRAsia, the Macao Government Tourism Office (MGTO) said it was “not aware” of visa control measures implemented by mainland Chinese authorities as cited by the investment community.
A number of brokerages has speculated that China’s President Xi Jinping will visit Macau in December to mark the 20th anniversary of Macau’s handover. Some analysts think such a visit might depress monthly GGR as some mainland Chinese players might actively choose to stay away from Macau at that time. There has been no official word on any President Xi visit to Macau.
Macau’s Secretary for Security, Wong Sio Chak, mentioned in a briefing earlier this week to media that local authorities have been strengthening their efforts to ensure the safety of several large-scale events scheduled for year-end, including the celebrations for the 20th anniversary of the Macau Special Administrative Region (SAR).
The Credit Suisse team said that due to the “more stringent background checks” to the attendees of the Macau SAR handover ceremony dinner this year, it saw a “high probability” that President Xi might visit Macau next month.
“Near term, we believe the traffic control ahead of the potential President Xi’s visit and the fact that large players who are likely to avoid entering Macau in this sensitive period should hurt the Macau GGR,” the analysts remarked.
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