Macau’s lifeblood, the casino industry, appears to be diminishing at the moment. Not as badly as Hong Kong’s economy, as tourists are still piling into the SAR on the western side of the Greater Bay. But Macau is feeling pain nevertheless, as gross gaming revenues last month appeared to fall sharply, ending the month down 8.6% YoY.
We wouldn’t say GGR fell off a cliff, as it has been known to do in past years. It’s more like falling off a wall. But still, a wall was enough to break Humpty-Dumpty, who was never quite the same thereafter.
What Macau has going for it, however, is something that is in short supply in Hong Kong at the moment. It has the confidence that things will get better. Speak to any casino executive right now and it will be hard to talk them down. Mass-market visitation continues to climb, new infrastructure projects are about to open, and an incoming Chief Executive is saying the right things ahead of his inauguration in December. All Macau needs is a bit of time and the picture will brighten again.
Indeed, most analysts expected positive growth numbers to return in September. That might be because of easier YoY comps (last year September was a typhoon-affected disappointment). If so, and momentum resumes, investors can probably expect some elasticity to return to these stocks, which have been hammered down recently.