A cap to the number of mainland visitors going to Macau will affect both the number of VIP and mass casino players, says Japanese brokerage Nomura.
“The cap proposal confirms our view that more tightening policies will be issued,” analysts Stella Xing, Wendy Liu and Harry Curtis wrote in a note issued on Tuesday. “We remain cautious and believe that the [Macau casino] sector has not yet bottomed out,” they added.
Macau’s Secretary for Social Affairs and Culture Alexis Tam Chon Weng announced that the government wants to impose a limit on the number of mainland tourists that visit Macau.
Commenting on the proposal, a trio of Wells Fargo Securities LLC analysts led by Cameron McKnight pointed out that such a cap was not in expectations.
Mr Tam told reporters last week that the local government will soon discuss the issue with mainland’s central government. He said no cap had yet been decided and that limits could vary for different seasons of the year. Mr Tam added he hoped the cap could be introduced still this year.
The Nomura team said: “Beijing has clarified that it wants Macau to be diversified with less reliance on gaming. Consequently, we believe that the visa policy should: control the number of frequent gamblers; bring convenience for normal visitors; and benefit Macau’s economy and Macau citizens’ life.”
Macau welcomed a record 31.5 million visitors last year. Visitors from mainland China accounted for over two thirds of the total.
The Nomura analysts added: “If the proposal is passed, it is likely that Macau will limit the number of visitors under the individual visit scheme (IVS) quota for mainland Chinese visitors. The number of visits under IVS during peak seasons such as Chinese New Year and October’s Golden Week will more likely be reduced.”
The IVS allows mainland Chinese living in eligible areas of the mainland to apply for a travel permit to visit Macau individually instead of having to be part of a tour group. Last year, 9.6 million mainland tourists visited Macau under the scheme. They accounted for 45 percent of the aggregate mainland visitor arrivals to Macau in 2014.
“Interestingly, Mr Tam did not mention about putting any cap on group visas, which accounted for around 47 percent of total Chinese visitors in 2014, with very few frequent gamblers opting for this,” the Nomura analysts noted.
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"The most worrying [thing] is whether [mainland] China will again tighten the issuance of travel visas [for visits to Macau]"
Luiz Lam Kai Kuong
Macau junket investor