Several brokerages expect Macau’s November casino gross gaming revenue (GGR) to be down anywhere from the 60s of percent to 70 percent, relative to November 2019, against the backdrop of ongoing travel restrictions between Macau and mainland China, and with the presence of fresh Covid-19 cases in the latter jurisdiction having the potential to limit market growth.
“We expect November GGR to be up 57 percent month-on-month to MOP6.9 billion [US$860.9 million] i.e., MOP230 million per day; 30 percent of November 2019,” wrote analysts Praveen Choudhary and Gareth Leung, of Morgan Stanley Asia Ltd in a Monday note. October saw Macau GGR down 25.8 percent sequentially, according to official data.
Investment analysts had said Macau’s October performance had been negatively affected by Covid-19 cases in the city in late September and early October, which hurt the market during that month’s Autumn Golden Week, traditionally a busy time for Macau’s tourism market.
Morgan Stanley noted that for the November outlook, a “recent Covid spike in the mainland could pose risks if cases spread into Guangdong,” the mainland province next to Macau, and which supplies a large portion of Macau’s tourists.
Sanford C. Bernstein Ltd said in a Monday note, it forecast November GGR to be down ‘over 60s of percent” versus November 2019. Analysts Vitaly Umansky, Louis Li and Kelsey Zhu added they expected GGR improvement which had “just begun”, to continue into December, “but more significant travel impediment removals are not likely until next year”.
The brokerage added: “Longer term, Individual Visit Scheme eVisa and group visa restart, and Hong Kong travel resumption will be necessary to drive GGR upwards”.
Technically, the border between Macau and Hong Kong is not closed, but travel restrictions including quarantine rules, render impractical short-term travel between the places.
DS Kim, Amanda Cheng and Livy Lyu, analysts at JP Morgan Securities (Asia Pacific) Ltd, said in their Monday note: “The next GGR milestone – if we can call it that – will be year-end and Chinese New Year (January 31 to February 6) holidays, but frankly the level of demand – unless very surprising either way – wouldn’t move the stocks much at this stage.”
Macau might see the daily volume of visitor arrivals go above “30,000” during weekends or when the city hosts “major events” in November and December, following a “stable” recovery trend in inbound tourism, said on Monday the Macao Government Tourism Office.
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"The resurgence of Covid cases in China is again delaying a market recovery [in Macau] and is a credit negative"
Vice president and senior credit officer at Moody’s Investors Service