Macau casino shares have fallen more than 50 per cent from their peak in January 2014 and are reversing back to 2011 levels.
This is due to China’s anti-corruption campaign which has driven down revenues and deterred high-rollers from visiting Macau. According to an analysis by Bloomberg Intelligence, the stocks doubled in 2013, spurred by the Cotai Central resort, higher earnings estimates and growth in Chinese consumer spending.
“Macau casino stocks have round-tripped, rallying in 2013 on accelerating growth and then reversing in 2014 and 2015 as revenue tumbled.”
The stock values mirror casino revenues, which are at their lowest since 2011 following China’s slowing economy and President Xi Jinping’s nationwide graft crackdown.
Macau’s gross gaming revenue for March fell 39 per cent to 21.5bn patacas ($2.7bn), which analysts surveyed by Bloomberg say shows the market is stabilising.
“The in-line result is just showing that the market is stable. I would think that the worst dip is over,” Shengyong Goh, a Hong Kong-based gaming analyst at BNP Paribas SA, was quoted as saying. “It’s going to be long time before any upside catalyst.”
Bloomberg Intelligence analysts say resorts due to open this year, however, could provide comfort for the industry. “Resorts scheduled to open later this year and stabilising Chinese economic growth could help revive revenue.”
