December is on track to be the weakest month of 2019 in terms of year-on-year performance of Macau’s casino gross gaming revenue (GGR) according to Monday notes from three separate brokerages. But “pent up” demand is likely to bring an improvement in market performance once an official visit to the city this week by China’s leader President Xi Jinping has been concluded, say several of the institutions.
Nomura’s Instinet LLC expects an approximately 8 percent to 10 percent casino GGR decline but adds it “could be worse”. The institution’s scenario is for December GGR of about MOP24 billion (US$2.99 billion).
Sanford C. Bernstein Ltd is predicting anywhere from -12 percent to -16 percent GGR year-on-year this month.
JP Morgan Securities (Asia Pacific) Ltd anticipates decline of -14 percent to -16 percent. It puts the likely December tally at MOP22.3 billion to MOP22.8 billion.
The worst-performing month so far this year was August, which witnessed an 8.6 percent year-on-year contraction in GGR. November was not far behind, down 8.5 percent.
Nomura was the most upbeat of the three institutions in relation to December performance.
“Our consultant checks suggest the recent step-up in visa restrictions ahead of President’s Xi’s visit later this week… something we have been flagging since October, resulted in weaker GGR numbers this week and last,” wrote analysts Harry Curtis, Daniel Adam and Brian Dobson
They added: “However, we believe that demand could pick up after Xi’s visit at the end of the month, so we are not rushing to change our monthly estimate quite.”
Sanford Bernstein analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu stated regarding the December GGR numbers in the first 15 days of the month: “Visa limitations/restrictions on IVS [individual visit scheme] and transit visas are impacting higher-frequency, higher-end players in both VIP and mass along with junket agents, which has led to significant declines in high-end visitation and GGR.”
JP Morgan’s DS Kim, Derek Choi and Jeremy An said in their Monday memo: “Admittedly, the magnitude of slowdown seems bigger than we (and the market) had initially expected.”
But the added: “We wouldn’t read too much into the December print, given that it’s likely just a short-term blip, and that ‘lost demand’ is likely to be made up in January/February with pent-up demand, in our view.”
China’s leader is coming to Macau for the 20th anniversary of the city’s handover from Portuguese administration to that of China. It has been anticipated that he will announce some policies to help the city diversify its economy beyond high-stakes casino gambling.
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Vitaly Umansky, Kelsey Zhu and Tianjiao Yu
Analysts at brokerage Sanford C. Bernstein