Macau casinos jump most in 6 months on tourism revival bets
MACAU casino stocks surged the most in 6 months after the city announced its plan to welcome back tour groups from mainland China as soon as November, marking a breakthrough that could boost the gaming hub’s tourism-dependant economy that’s been hammered by Covid restrictions.
A Bloomberg Intelligence gauge of the city’s 6 licenced casino operators gained more than 10 per cent on Monday (Sep 26). Sands China climbed more than 18 per cent, leading the advance, while SJM Holdings rose more than 14 per cent.
Macau’s neighbouring mainland province of Guangdong will first resume group tours to the enclave, and then the policy will expand to Shanghai, Zhejiang, Jiangsu and Fujian, chief executive Ho Iat Seng said at a press conference Saturday. He hoped daily visitation could reach 40,000 after the travel easing is implemented, compared with under 11,000 in August.
In addition to welcoming back tour groups for the first time in almost 3 years, China will resume issuing e-visas for people visiting Macau by early November, he said. That would make it easier for travellers to obtain permits to enter the city, which currently requires pre-booked in-person appointment at the immigration office counters and an approval period of about a week.
The changes provide Macau with a tentative path towards recovery. The once bustling gambling hub has taken a heavy blow from Covid Zero policies in the mainland, where most of the city’s tourists come from, with gaming revenue slumping since March amid repeated lockdowns and tougher visa restrictions that kept visitors away.
The plunge in tourism has rippled through other sectors, such as suppliers of slot machines, baccarat table systems and other casino equipment. They moved out to more welcoming markets such as Singapore and the Philippines.
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Headwinds
“Finally, we feel we can talk about a return to normalcy,” JPMorgan Chase & Co analyst DS Kim wrote in a note Sunday. “The resumption of e-visa and group tours should alleviate friction for a Macau trip, as well as signal to many that it’s OK to visit Macau, in turn boosting demand into the year-end holidays and 2023.”
Still, Macau faces substantial headwinds that are likely to stymie its rebound. Mainland China continues to impose Covid lockdowns, even for a small number of coronavirus infections, which is hurting domestic travel demand. Macau has made clear it will continue to align itself with Covid Zero, meaning the spectre of movement restrictions also hangs over the gambling hub if local infections crop up.
More broadly, Beijing is tightening control over the travelling of frequent gamblers, which the e-visa change won’t help, Credit Suisse analysts including Kenneth Fong wrote in a note Monday. Packaged tour visitors are also generally lower-spending players, and there’s also the risk of another round of casino closures if Covid cases spike again, he said.
While nearby Hong Kong has scrapped its mandatory hotel quarantine in an effort to lure back international travellers and revive its status as a global financial hub, Macau will maintain its 7-day hotel quarantine policy for visitors from the financial hub, Ho said. Macau remains largely shut to overseas travellers. BLOOMBERG
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