China resumes tourist visas to Macau, lifting casino stocks

[SHANGHAI] China will resume issuing tourist visas for visitors to Macau, paving the way for the mass return of Chinese punters to the world's largest gaming hub after months of losses.

Zhuhai city in neighboring Guangdong province will begin issuing tourist visas, including both individual and group tours, for mainland residents to travel to Macau again on Aug 12, said Macau's Secretary for Social Affairs and Culture Ao Ieong U on Monday in a press briefing.

The move reverses a ban implemented in late January to contain the spread of the coronavirus. The resumption of tourist visas could gradually be expanded to the rest of the mainland, Ao Ieong said.

"By resuming Zhuhai visas first, we will monitor the situation and see if we could strive to achieve more convenience for residents in Guangdong or other places to come to Macau," she said. "Our economy needs tourists."

The resumption of visas effectively allows for the revival of the gambling enclave whose revenue had been five times that of the Las Vegas Strip before the pandemic, driven largely by Chinese demand. Without Chinese visitation, Macau's gaming revenue plunged by over 90 per cent for four consecutive months and operators have been losing US$15 million daily in expenses, according to a Morgan Stanley estimate.

A Bloomberg gauge of Macau stocks jumped as much as 6.9 per cent in Tuesday morning trading on the news.

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In addition to the visa resumption, a two-week quarantine imposed on Macau travelers upon their return to the mainland will be lifted throughout the country from Aug. 12, China's Hong Kong and Macao Affairs Office said in a statement. The quarantine rule was previously lifted for Guangdong province last month.

Macau's gross domestic product, heavily reliant on the tourism and gaming industry, shrank 49 per cent in the first quarter of this year. Even though casino operators reopened after an unprecedented 15-day shutdown in February, travel curbs meant tourists and high rollers couldn't get there.

The latest moves are a "huge step in the right direction," George Choi, a Hong Kong-based analyst at Citigroup Inc., wrote in a note. More provinces and cities in Guangdong province, which accounts for a third of Macau's visitation, could see visa issuance resume in the next few weeks, he said.

Still, Sanford C Bernstein analysts led by Vitaly Umansky cautioned that there is a risk that visa issuances could again be suspended if there is a jump in Covid-19 cases.

The coronavirus outbreak has been largely contained in Macau as well as in mainland China, although neighboring Hong Kong is seeing a resurgence. Macau hasn't found any new coronavirus cases since the end of June.

BLOOMBERG