GGRAsia – HK Covid wave could delay further Macau recovery: broker

HK Covid wave could delay further Macau recovery: broker

Feb 24, 2022 Newsdesk Latest News, Macau, Rest of Asia, Top of the deck

Hong Kong’s Covid-19 outbreak is “likely to worsen” before showing any signs of improvement, which could delay the expansion of regional quarantine-free travel including to Macau and has a negative impact on the city’s gaming industry, said a Wednesday note from Andrew Lee, an analyst at brokerage Jefferies Hong Kong Ltd.

Hong Kong’s Centre for Health Protection stated on Wednesday it was investigating 8,674 additional Covid-19 cases, of which three were imported, and the rest were people locally infected. It brought the total number of positive cases in Hong Kong to 75,248 as of Wednesday.

With effect from February 17, people arriving in Macau via the Hong Kong-Zhuhai-Macau Bridge (pictured) have been required to wait – possibly for as many as six hours – at the boundary crossing point, for the result of a Covid-19 nucleic acid test.

People with a ‘negative’ result will be taken to a medical observation hotel in Macau, for a 14-day quarantine.

“Although Hong Kong historically accounted for 15 percent to 20 percent of the business” for Macau casinos prior to the pandemic, the current importance of that market for the Macau gaming sector was “small”, with mainland China arrivals “accounting for 93 percent of total arrivals” to Macau “during the recent Chinese New Year holidays,” wrote Mr Lee in a Wednesday note.

He was referring to the recent seven-day festive break for the lunar new year holidays, that had started on January 31, and writing in the context of a memo on the fourth-quarter and full-year results of Macau casino firm Galaxy Entertainment Group Ltd.

“Management stressed the recovery will remain ‘gradual, managed and choppy’,” noted the analyst, referring to commentary by that gaming group.

Analyst Vitaly Umansky of brokerage Sanford C. Bernstein Ltd said in a Wednesday memo, referring to observations by management of Galaxy Entertainment, that the Hong Kong Covid outbreak “has delayed Hong Kong’s reopening and travel disruptions have been apparent this year.”

“We expect the Macau recovery to be gradual and waiting on government relaxation policies – such as concession renewal,” easing of “quarantine restrictions” and expansion of available “visa types” for travel between the mainland and Macau, said Jefferies’ Mr Lee.

Mainland China is the only place currently to have a largely quarantine-free travel arrangement with Macau.

So far there has been no report that the mainland authorities are going to reinstate group-tour visas for visits to Macau. That visa programme was suspended in 2020, in the early phase of the Covid-19 pandemic crisis.