Is it now?

It looks like all cards are being put on the second half of this year. Two new mega casino resorts are in the pipeline (Studio City and Galaxy), which it is hoped will attract millions of new mass players, there are more favourable comparisons to give positive headlines, and now the signs of a recovery in China could boost the high roller segment, still the most important customer base here.
The VIP segment is traditionally linked to economic cycles as most of the high rollers are businessmen who tend to bet more when times are good. The latest data from credit flows in China point to a likely recovery in the coming months that the market hopes is translated into more gamblers here, despite the anti-graft campaign. ‘China credit growth is finally showing some signs of improvement, and if this trend continues, we could see better results in Macau in late 2015’, wrote Wells Fargo on Friday in a note to clients.
The US bank says that credit in China expanded 37 per cent in December from a year ago, a growth that compares to a plunge of 40 per cent in the third quarter of 2014 that triggered a sell-off in mainland assets. Overall, in 2014 the total credit granted by banks in China dropped 5 per cent versus an increase of 9 per cent in 2013. This week, Beijing is scheduled to release 2014 GDP data, an event that the market is watching closely.
‘In our view, Chinese credit growth is one of a few key leading indicators of Macau VIP revenue growth, and was central to both our very bullish call in 2013 and our cautious outlook’, says Wells Fargo. ‘Trailing twelve month credit growth is a strong leading indicator of VIP results, in our view, and is improving.
We believe a 6-12 month lag exists between trailing twelve-month (TTM) total Chinese credit growth and Macau VIP results’. Wells Fargo is now expecting a recovery in VIP growth in the second leg of this year, with revenues from the segment predicted to go up 6 per cent, after a first half in the red with revenues expected to drop 24 per cent.
But the VIP outlook continues to be challenged by recent events. The arrest of more than 100 people in Macau, including Stanley Ho’s nephew Alan Ho, on charges of illegal prostitution made the news all over the world last week. Rumours of the shutdown of one of the most famous junkets here, David Group, and the closing of 50 VIP rooms in the coming months, are also signals that a recovery is still far away.
Macau’s gross gaming revenues for the fourth quarter of 2014 reached MOP75.8 billion, of which casino gambling accounted for MOP75.58 billion. In addition, VIP Baccarat saw casinos rake in MOP446.1 billion, while mass market Baccarat revenues totaled MOP22.3 billion in the fourth quarter of last year.