No real recovery until Individual Visit Scheme restart – Brokerage

Advisory firm Union Gaming indicated that although the easing of cross-border restrictions for Macau and Guangdong was a step in the right direction, without a restart of the Individual Visit Scheme by Chinese authorities or removal of restrictions for Hong Kong visitors, there will not be a real recovery of the local gaming sector.

Starting from 6:00am of today (Wednesday) people travelling from Macau will no longer have to undergo the mandatory 14 days quarantine in the Chinese Province, if they can provide a negative Covid-19 test and make a declaration of their good health through the health codes of both regions.

‘While the nucleic acid test and health requirements still create some notable consumer friction, the relaxed border restrictions should facilitate additional visitation and ultimately GGR for Macau marking the first step towards recovery after three months of virtually no revenue. In 2019, Guangdong comprised about one-third of all visitation to Macau but we suspect the GGR contribution was even greater,’ the firm indicated in a note.

The measure effectively allows for some Guangdong residents with valid visas to travel to Macau, as they are not required to undergo quarantine upon return, however, the issuing of new individual and group visas by Chinese authorities are still suspended.

Introduced in 2003, the Individual Visit Scheme allows mainland residents to visit Macau Hong Kong in their individual capacity, and currently covers 49 Chinese cities.

‘About 75 per cent of all visitors from Guangdong to Macau arrived under the Individual Visit Scheme, which is still suspended. We continue to view the reopening of the IVS as the main spigot for Macau that still needs to be turned on followed by health cooperation with Hong Kong,’ the firm indicated.

According to the brokerage, in 2019 the IVS accounted for a third of all visitors to Macau and about half of the mainland visitors, with Hong Kong alone comprising almost 20 per cent of total visitation to Macau, making it the second-largest feeder market behind Guangdong.

Macau received 39.4 million visitors in 2019, of which 71 per cent were from Mainland China and 18.7 per cent from Hong Kong.

Currently, people coming from Hong Kong to Macau are required to present a negative Covid-19 test and even after that are still required to undergo a 14-day medical observation in designated locations.

‘In short, Hong Kong and IVS account for half of all visitation to Macau. So while alleviating border restrictions in Guangdong is a solid first step, we’ll look forward to more good news hopefully later this summer on reinstating IVS and green health code reciprocity with Hong Kong,’ Union Gaming noted.