Macau’s December gross gaming revenue (GGR) tally “could be worse” than the 8 percent to 10 percent year-on-year decline currently predicted by Nomura’s Instinet LLC, the group said in a Monday memo to investors, estimating the aggregate in the first eight days was down 19 percent from the prior year.
“Our latest consultant checks suggest the weaker weekly GGR number” was “due to a step up in visa restrictions ahead of President’s Xi [Jinping]’s visit later this month, which is something we have been flagging since October,” wrote analysts Harry Curtis, Daniel Adam and Brian Dobson, referring to widespread speculation that China’s leader will come to Macau this month.
Instinet estimated GGR per day for the first eight days of December was “roughly MOP713 million [US$88.4 million], down approximately 7 percent sequentially versus last month’s average (MOP763 million per day), and roughly 19 percent lower than the same period last year”.
Two weeks ago Credit Suisse AG said in a note that earlier-than-expected visa controls imposed in the fourth quarter by mainland China authorities on residents heading to Macau could “dampen the demand” for the city’s premium mass and VIP play for part of November and into December.
Credit Suisse had cited industry sources as saying that mainland authorities were applying “temporary” administrative controls in the period from “November 22 to December 20”, said to be particularly aimed at people logged as repeat visitors from the mainland to Macau.
The move was said to be in order to “limit the traffic” to Macau “ahead of the China government officials’ visit to Macau for the 20th anniversary”. Macau is hosting celebrations in December for the 20th anniversary of the handover of the city from Portuguese administration to that of China.
Xi visit speculation
Instinet said in its Monday note that a tough comparison with December 2018 – which had registered 16.6 percent GGR growth year-on-year – and what the market anticipated would be a visit by China’s leader President Xi “toward the end of the month”, would “likely have a more negative impact on visitation and GGR than expected,” wrote analysts Mr Curtis, Mr Adam and Mr Dobson.
There has been no official confirmation so far of any visit to the city by China’s leader. December 20 is the handover anniversary.
Brokerage Sanford C. Bernstein Ltd said in a Monday note on Macau’s GGR performance for the first eight days of December inclusive, that the month-to-date average daily rate was approximately down by 16 percent compared with December 2018’s MOP854 million; and down by 6 percent judged against November this year’s average daily rate of MOP763 million.
“We estimate mass to be down low single digits of percent year-on-year, while VIP volumes are down in the low 30s of percent,” wrote analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu.
The institution added: “The weakness in both segments is exacerbated by even tighter visa controls (something that began in November) in preparation for the visit to Macau by China President Xi Jinping later in the month.”
Sanford Bernstein’s analysts further noted – referring first to China’s individual visit scheme (IVS) exit visa programme allowing mainland residents from certain more economically-developed cities to visit Macau as independent travellers, and second to a visa that allows mainlanders to use Macau as a transit point to another destination: “Visa limitations/restrictions on IVS 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.”
The brokerage said in the light of such factors it was reducing its estimate for December GGR to a decline of between 16 percent to 12 percent year-on-year.
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Macau’s total VIP gross gaming revenue in the first quarter of 2021