The potential for political risks related to the United States-China trade tariff row might raise some concerns among observers regarding the operations of U.S. firms in Macau’s gaming industry, but any possible concerns “appear overblown,” says CBRE Equity Research.
“Political risks, such as retaliatory actions against U.S. gaming operators in Macau, are a concern but appear overblown,” wrote analysts John DeCree and Max Marsh in a Monday memo.
The institution added: “Macau’s integrated resorts are critical to the region’s economy, contributing over 80 percent of government tax revenue and U.S.-based operators alone employ 14 percent of the workforce,”
It added: “Direct actions against operators could destabilise the [Macau] SAR [Special Administrative Region], making such moves unlikely.”
According to the analysts, “collateral from broader policies like yuan [the Chinese currency] devaluation or capital flow restrictions pose greater risks”.
Earlier this month, U.S. President Donald Trump raised to a minimum of 145 percent, the U.S. tariff on imports from China. Beijing raised its own tariffs on U.S. goods to 125 percent.
“Macau GGR [gross gaming revenue] growth has been moderating in recent months, and now that outlook gets cloudier amidst a disruptive trade war,” noted CBRE.
It said: “Macau’s main feeder markets of Guangdong and Hong Kong have economies that are highly reliant on exports. A prolonged trade war would impact each of these markets, and therefore impact demand for Macau.”
The CBRE team said however it believed “the biggest near-term risk for Macau is fundamental rather than political”.
“The growth trajectory in Macau had already been moderating in recent months, with GGR increasing just 0.6 percent year-on-year in first-quarter 2025,” stated Mr DeCree and Mr Marsh.
They added: “However, this had already been reflected in the sector’s current valuation prior to the April 2 tariff announcements. Now, valuation reflects even greater economic risk, coupled with regulatory concerns.”
Nonetheless, the analysts said they “see the potential for an economic slowdown in China,” which could impact the Macau gaming industry.
While recent stimulus measures in China “have spurred some domestic consumption, the savings rate [in the country] is still elevated at 10.6 percent of GDP [gross domestic product],” pointed out CBRE.
“If exports decline, China could be motivated to provide additional fiscal stimulus to unlock the mountain of savings and boost domestic spending, which should support Macau’s gaming demand,” added the institution.
“While we appreciate both the economic and political risks facing Macau and China more broadly, the current market conditions have once again created a compelling opportunity for long-term investors” in the stocks of Macau gaming firms, added Monday’s memo.
