Analysts from Sanford C. Bernstein and JP Morgan have stated that the visit of Chinese President Xi Jinping to Macau, between December 18 and 20, has already had an impact on the city’s visitation and gaming results.
‘President Xi Jinping’s arrival […] has been causing a material disruption to the gaming industry (much more so than prior visits by senior officials and Xi himself in late 2014)’, the note published today indicates.
The brokerage noted that, since November, Chinese authorities have implemented stricter visa controls on visitation into Macau, limiting visits from higher frequency entrants.
‘This week, the authorities went further and have reduced the frequency of the Turbojet ferry service between Macau and Hong Kong (from every 15 minutes to every 30 minutes) and significantly increased security at the border crossings (i.e. more extensive document reviews and X-Ray control of visitors’ baggage).
Bernstein also mentioned that the closure of the recently opened Taipa Light Rail Train and the way money flows into Macau have been tightened with more security checks on money changers and touts in the casinos, and there is greater concern around underground banking movements.
‘Additionally, there has been widespread concern (so far unwarranted), that ATMs may run out of cash and may not be refilled during Xi’s visit to Macau (the Monetary Authority has said that ATMs will run as usual, but rumors have an effect on people in any event’, the release by analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu indicated.
Bernstein claimed that the impact on visitation this week has been more severe than initially expected, with November gaming results already weaker than expected and with a weaker December expected.
Local gaming results have dropped by 8.5 percent year-on-year in November 2019 to MOP 22.8 billion (US $2.8 billion), with accumulated revenues between January and November reaching MOP 269.6 billion, a 2.4 percent drop when compared to the same period last year.
Meanwhile, JP Morgan analysts DS Kim, Derek Choi and Jeremy An, reported that the first 15 days in December had seen an estimated MOP 10.8 billion in gross gaming revenues, and estimated December to be the ‘weakest month’ of 2019, with a drop between 14 to 16 percent year-on-year to about MOP $22.3 billion or MOP $22.8 billion.
Bernstein predicts a drop of over 15 percent in December, depending on rebound strength in the latter part of the month, with VIP to have a fall of over 20 percent and Mass to record the first monthly decline since the first quarter of 2016.
JP Morgan analysts specified that any policies announced on easing Macau visas for mainland travelers, expansion of border gates, plus improved logistics and better integration into the Greater Bay Area and Hengqin would be great news for the gaming industry.
Bernstein analysts also mentioned that some aspects of overall large-scale policy initiatives, such as better integration of Macau into the Greater Bay Area, would be key drivers of future Macau growth, especially in Mass and Premium Mass, but that the near-term impact is very limited.
The People’s Bank of China announced yesterday that it will raise the daily limit on individuals’ remittance from Macau to RMB in Mainland China from RMB50,000 (MOP57,301/US$7,139) to RMB80,000.
News agency Reuters previously reported that the Chinese head of state would announce several financial policy rewards for the Macau SAR during his visit, such as the establishment of an RMB-denominated stock exchange, an RMB settlement center, and the allocation of land for Macau to develop in Hengqin.
