Macau will again allow mainland Chinese passport holders who transit via the city to stay for up to seven days. The new system will be effective from Wednesday, July 1, the Macau police said in a statement on Tuesday.
Since July 1, 2014, the Macau government had tightened transit visa rule implementation, limiting such travellers to a five day stay, with documented proof that they were going to a third destination. It had been claimed that the transit visa system was being manipulated by high roller gamblers and their agents to make multiple trips to Macau under the cover of business trips to onward destinations.
With the new rules, mainland passport holders will be allowed to stay in the territory up to seven days if they use Macau as a transit to other destinations. The seven days rule will only be applied if the mainland passport holder did not enter Macau in the previous 30 days. Previously the cooling off period was 60 days.
Mainland passport holders breaching the new transit visa regime will be granted only two days of stay if they again enter Macau on a transit visa within 30 days. For a second such breach of the rules they would be denied entry into Macau for 30 days.
Analysts at brokerage Sanford C. Bernstein Ltd, led by Vitaly Umansky, estimate that the use of transit visas to Macau has declined by 50 percent since July 2014. In a note on Tuesday, the analysts said the relaxed transit visa rule will be positive for premium mass and VIP.
“From our conversations in Macau, we estimate that an average VIP player visits Macau [about] 4+ times per year and stays on average 1 night on each visit. The soon-to-expire transit visa rule implemented in July 2014 had negative impact on VIP and premium mass players,” said the Sanford C. Bernstein team.
They added: “Many of the junket agents were also limited by their ability to accompany VIP customers to enter Macau. Under the new rule, transit visas may be used, as supplement to the existing Individual Visit Scheme (IVS) visa, for trips to Macau.”
In April, the Macau government asked Beijing to “improve” the issuance of visas under the IVS as a way to control the inbound number of travellers from mainland China.
Analysts Anthony Wong and Angus Chan from UBS Securities Asia Ltd said in a Tuesday note that Macau “gross gaming revenue run rate has dropped 45 percent from [its] peak”, with visa changes likely accounting for 5 percent to 10 percent of the slowdown, which “might now come back”.
“We believe the policy’s significance lies in a potential turning of the government’s regulatory cycle – it should remove the overhang in the market that the Central/Macau governments will actively pursue policies to further ‘hurt’ the industry,” said the UBS duo.
They added: “It might also suggest that current demand has reached a level the government feels a need to act to support it from falling further. For some gaming customers previously shying away from Macau, it could be read as a positive signal that visiting Macau is no longer as sensitive.”
Nasdaq-listed shares of casino companies with operations in Macau rose following the news of a relaxation in transit visa rules. Melco Crown Entertainment Ltd rose 9.7 percent to US$19.63 in New York on Tuesday. Shares of MGM Resorts International, Wynn Resorts Ltd and Las Vegas Sands Corp were all up at the end of the Nasdaq trading day.
But analysts at Wells Fargo Securities LLC said they don’t expect the new policy announcement to be “a sustained shift in China’s policy towards Macau, or an easing in the anti-corruption campaign”. The broad slowdown in China’s economy “remains a headwind” for Macau’s gaming industry, added analysts Cameron McKnight and Tiffany Lee.
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”The Macau government is not aiming to trivialise or drive out the junket sector, but to regulate the sector so that it would not hurt Macau’s reputation”
Alvin Chau Cheok Wa
Chief executive of privately-held VIP junket business Suncity Group