CBRE Capital Advisors Inc says that while it does not expect Macau June’s “high-teen” percent growth in casino gross gaming revenue (GGR) to continue, it does “see the potential for Macau to return to consistent GDP-plus growth” levels.
The brokerage was referring to gross domestic product performance for China, the main supplier of tourists to Macau..
“Sustainability of GGR growth will depend on economic conditions,” observed CBRE analysts John DeCree and Max Marsh.
Casino GGR in Macau rose 19.0 percent year-on-year in June, to MOP21.06 billion (US$2.61 billion), showed data released on Tuesday by the city’s Gaming Inspection and Coordination Bureau.
The year-on-year percentage gain was around double what most analysts had anticipated, and several other brokerages had said that growth momentum might continue in July. Some mentioned that June – typically a low-season month – had benefitted from concerts held in Macau, including by Hong Kong pop singer Jacky Cheung, and South Korean-pop superstar G-Dragon. Several institutions noted more high-profile concerts were due in July.
The CBRE analysts observed in their Tuesday memo that June GGR had brought “surprises to the upside”.
Though they cautioned: “While we appreciate the foot traffic draw of such events, we view Macau’s recent return to growth as a function of stimulus and economic improvement in China.”
An anticipated positive correlation between GDP performance in China and Macau GGR has been mentioned previously by investment analysts.
CBRE stated in relation to China’s overall economy: “Continued liquidity injections from the People’s Bank of China, improving retail sales, and stock market gains… all help lift consumer confidence and consumption, which should flow through to Macau.”
The institution drew attention to its previous commentary suggesting China might ramp up stimulus measures to spur domestic consumption to better weather the U.S.-China trade war.
The analysts stated, referring to the reserve ratio requirement (RRR), the percentage of a bank’s deposits that must be held in reserve: “We saw China do just that with an array of proactive measures, including mid-May cuts to the RRR (50 basis points) and all three of its benchmark lending rates (10 basis points), bringing them to their lowest levels since 2019.”
Mr DeCree and Mr Marsh added: “China’s central bank introduced an additional 19 targeted measures in June aimed at improving consumption and confidence. These measures, coupled with the potential frontloading of exports during the 90-day pause on most new [U.S.] tariffs announced in May, are likely driving some short-term economic growth.”
They added: “We are encouraged by the signs of economic stability in China and the acceleration of GGR in Macau over the past few months.”
