Foot traffic on Macau casino floors “continues to soften” despite the opening on October 27 of a major new property, said a note from Daiwa Securities Group Inc on Monday.
“This softness might be due to the increase in oversight of China’s State Administration of Foreign Exchange (SAFE) on UnionPay cash withdrawal that we have flagged earlier, which likely impacted gaming activity of high-frequency, grind mass visitors,” said analysts Jamie Soo, Adrian Chan and Jennifer Wu, referring to the electronic bank card payments system of China UnionPay Ltd.
According to mainland media reports published in September, with effect from January 1, 2016, each UnionPay-enabled card will have a new, annual, RMB100,000 (US$15,727) cash withdrawal limit at automated teller machines outside mainland China. Prior to that, with effect from October 1, 2015 until December 31, 2015 there will be a RMB50,000-per-card ATM cash withdrawal limit, it was additionally reported.
Analysts at UBS Securities Asia Ltd had said in a note at the time the move was announced the bank expected “no material direct impact” on the Macau gambling market, as “withdrawing cash from ATMs is not a major source of cash for most gamblers”. But UBS added that the policy was likely to cause “sentiment overhang” among Chinese consumers regarding UnionPay card use in general.
Soft November start
On Monday, Daiwa said – citing unofficial industry data – that Macau’s tables-only casino gross gaming revenue (GGR) for November 1 to 8 inclusive was HKD3.8 billion (US$490.3 million) with an average daily revenue (ADR) of HKD481 million.
It said that represented a decline of 38.5 percent judged year-on-year and a decline of 13 percent week-on-week, noting that the previous week had included the first five days of operation for Cotai’s Studio City casino resort.
“Despite the obvious GGR softening, this set of numbers has already been buoyed by the inclusion of two weekends… which suggest that on a normalised level, ADR should have been even lower than HKD481 million on weekdays,” noted Daiwa. The brokerage added that during the period, Melco Crown Entertainment Ltd, the 60-percent owner of Studio City, had added 1.4 percentage points to its Macau GGR market share, taking its portion for the first eight days of November to 14.8 percent.
Japanese brokerage Nomura said in a Tuesday note: “In our view, Macau (especially VIP gaming) is not out of the woods yet…”
Analysts Richard Huang and Stella Xing said they expected Macau’s 2015 GGR to fall 35 percent year-on-year, with a likely 8 percent fall in 2016.
A note the same day from brokerage Sanford C. Bernstein Ltd looked at the longer-term picture for Macau.
“We estimate that Macau mass GGR in 2015 will be only circa 13 basis points (bps) of China GDP [gross domestic product] (even less so if you consider that a portion of mass GGR in Macau stems from Hong Kong and other non-Chinese customers),” wrote analysts Vitaly Umansky, Simon Zhang and Bo Wen.
They added that this was “dwarfed” by the U.S. market, where mass casino GGR represented circa 38 bps of GDP, and the Philippines where the brokerage estimated mass GGR represented 47 bps of national GDP.
“Over the longer term, income growth of Chinese families will drive Macau’s gaming revenue growth. The number of Chinese households with annual disposable income of over US$15,000 will be more than doubled between now and 2025 (an addressable market of over 450 million people),” said Sanford Bernstein.
Nov 24, 2020Morgan Stanley banking group says it remains “medium-term bullish” on the Macau casino sector, due to factors including pent-up demand within China for a variety of leisure services and spending,...
Nov 24, 2020
Nov 24, 2020
"Unfortunately, I cannot come to Macau nor can any of my team. The global pandemic has created a situation that is very difficult for all of us … I am very hopeful that we can come to Macau to bring back a reimagined House of Dancing Water"
Creative director of the House of Dancing Water show