Macau’s gaming market is in an up cycle that started in mid-2016, and which is likely to continue “for the next few years”, says a report from Morgan Stanley Asia Ltd.
Giving possible reasons why the Macau market had not yet peaked, analysts Praveen Choudhary and Jeremy An stated: “Many of the indicators are at a discount to what we saw in the last peak (first quarter 2014) including table and slot yields (win/unit/day), staff cost inflation, marketing and advertising costs, and valuation.”
The Macau market’s casino gross gaming revenue (GGR) tally for the first four months of 2018 stood at nearly MOP102.24 billion (US$12.6 billion), a year-on-year expansion of 22.2 percent.
Morgan Stanley said it retained its 2018 Macau industry GGR forecast at 16 percent but raised “mass growth estimate to 17 percent (from 15 percent) while lowering VIP growth outlook to 15 percent (from 18 percent)”.
Fitch Ratings Inc said in its latest global report on the outlook for the gaming industry, that the VIP gambling segment in Macau “continues to benefit from solid demand characteristics and a more healthy junket environment”.
JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim and Sean Zhuang said in a Sunday note that there was “good, yet unmodelled” market potential in terms of Macau tourism, from the opening of the Hong Kong-Zhuhai-Macau Bridge, “as well as potential policy support with regard to the Greater Bay Area initiative”.
Those were references first to a major piece of infrastructure spanning the Pearl River Estuary, that will provide a direct road link to Macau from Hong Kong International Airport, a major regional hub. The second reference is to a central government scheme to create a major conurbation around the Pearl River Estuary that will link the economies of Hong Kong, Macau and the neighbouring Chinese mainland province of Guangdong.
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“We see that basically the ‘golden’ periods [for Macau's casino industry] are all concentrated in the second half of this year”
Lei Wai Nong
Macau’s Secretary for Economy and Finance