Macau | Monetary tightening to soften VIP growth – Bernstein

An expected tighter monetary scenario in the coming months affecting Chinese visitors ‘may create a softening growth environment for VIP,’ given liquidity is still a key driver in gross gaming revenue for the segment

Macau (MNA) – An expected tighter monetary scenario in the coming months affecting Chinese visitors ‘may create a softening growth environment for VIP,’ given liquidity is still a key driver in gross gaming revenue for the segment, brokerage firm Bernstein said in a report on Monday.

Bernstein believes shorter liquidity and a softer real estate sector will eventually lead to a ‘significant deceleration in 2018’ in the VIP segment, while ‘mass should continue to remain robust as overnight visitation grows helped by new supply expansion and improved transport.’

The report also highlights that the mass segment could move in expansionary grounds as visitor spending and overnight visitations are expected to maintain an upward trend.

Regarding the impact of real estate upon the gaming sector in the Macau SAR, the report shows that booming property prices have impacted positively, while a slump in 2015 led to a sharp decline in the sector.

The report estimates GGR growth in 2018 will be around 11 per cent, ‘largely driven by VIP slowdown,’ with the sharpest deceleration in the second half of the year.

On the other hand, Bernstein remarks that growth in 2018 ‘could slow from 2017 levels as room supply becomes a constraint,’ given net room supply growth in Macau in 2018 will be less than 5 per cent.

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