Its growth streak reaches 18th straight month

2018 strongest year since 2014 for Macau casinos

Analysts will be watching to see if Macau fares better than the Golden Week holiday in October, when the enclave reported disappointing visitor number and weaker-than-expected gaming revenue data.
2018-02-01
Macau
Reading time 1:36 min
Still in the slow process of recovery since August 2016, gaming revenue has surged 36 percent in January in Macau, beating 27 percent estimates designed by industry experts in the last quarter of 2017.

Macau’s casino revenue growth surged the most in four years as visitors flow to the gambling niche before the Chinese New Year rush.

According to figures released by Macau’s Gaming Inspection and Coordination Bureau on Thursday, gross gaming receipts rose 36 percent in January to 26.3 billion patacas (US$3.3 billion), while the median estimate was for a 27 percent according to surveys by the end of 2017. 

“Overall revenue trends in January have been healthy,” Daiwa Capital Markets analysts led by Jamie Soo said in a note on Monday, “We believe this situation paves the way for a solid Lunar New Year period beginning in mid-February.”

Macau, the only Chinese city where gambling is allowed, usually benefits from the timing of the week-long New Year holiday, which this year begins Feb. 16. Analysts will be watching to see if Macau fares better than the Golden Week holiday in October, when the enclave reported disappointing visitor number and weaker-than-expected gaming revenue data. Casinos regained strong momentum after the holiday.

The Macau units of Las Vegas Sands Corp and Wynn Resorts Ltd. last week reported stronger-than-expected earnings for the fourth quarter. Still, sexual harassment allegations against casino magnate Steve Wynn have cast a shadow over the industry and raised the possibility of closer scrutiny from Macau regulators.

Macau has been slowly recovering since August 2016, when it began to emerge from a gloomy period that began more than two years earlier when casino takings were severely dented by Chinese president Xi Jinping’s crackdown, and Chinese officials started avoiding Macau out of fear of being exposed on their lavish lifestyle. 

And although some international ratings agencies, like Fitch Ratings, predict that the mass market will outgrow the VIP segment -with an expansion of 14 per cent compared to the latter’s 8 per cent-, the widespread forecast also points out that the growth rate will begin to decelerate in the fourth quarter last year.

“Fitch’s cautious position on the VIP reflects its inherent volatility and the potential for an economic slowdown on mainland China. The volatility still remains for the sector despite the strong result in January, given the market’s susceptibility to policy changes, economic conditions, and pronounced seasonality." said Alex Bumazhny, senior director for corporate finance at Fitch Ratings. 

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