Macau Gaming Revenue Growth Slows Again on Weaker China Economy

(Bloomberg) -- Macau’s gaming revenue slowed to single-digit growth for a second straight month, providing further evidence that China’s economic slowdown is taking a toll on the enclave’s casino operators.

  • Gross gaming revenue in Macau rose 2.6 percent in October to 27.3 billion patacas ($3.4 billion) from a year earlier, according to data Thursday from the Gaming Inspection & Coordination Bureau. That missed the median analyst estimate for growth of 3.5 percent.

Key Insights

  • October’s result is the clearest signal yet that China’s slowing economy and the trade war between Beijing and Washington is weighing on the outlook for the world’s biggest gaming center. Revenue growth in September slowed to 2.8 percent, the weakest showing in two years, much of that due to a typhoon that shut casinos for more than a day.
  • The result may not bode well for Macau since October is considered a peak month, traditionally showing higher gaming revenue because of the Golden Week holiday. The month had a robust start, as Chinese tourist arrivals to Macau for Golden Week jumped 14 percent from a year earlier.
  • Last year’s October performance made for a tough comparison, said Union Gaming Securities Asia Ltd. analyst Grant Govertsen in a note. VIPs are making up a smaller percentage of gamblers, and therefore traditional holiday months like October will show less dramatic results, he said.

Market Reaction
  • The Bloomberg Intelligence index of Macau casino stocks initially pared an earlier advance after the data was released Thursday, then rallied with the overall Hong Kong market, closing with a 2.6 percent gain. Wynn Macau Ltd. jumped 4.6 percent and MGM China Holdings Ltd. rose 3.8 percent.
  • The casino gauge has slumped in recent months after a two-year rally. It is down more than 40 percent from a May peak, touching a 20-month low on Tuesday.

Get More

  • Even though October represented the 27th straight month of revenue growth in Macau, the casino hub has seen softening growth since the second quarter. While mass market revenue has maintained solid revenue growth, VIP business has been hit by weakening China property price and stock market turmoil.
  • Click here for analysts’ take on Macau gaming.

©2018 Bloomberg L.P.