Macau casinos told to expect a long road to market recovery

The 39 casinos in Macau could reportedly start to recover from the economic impacts of the ongoing coronavirus pandemic from June although it could take up to a further two years for their gaming businesses to record 2019 levels of success.

According to a report from Inside Asian Gaming, this is the belief of the Instinet equity trading arm of international brokerage Nomura Securities Company Limited after Macau saw its aggregated gross gaming revenues for March drop by almost 80% drop year-on-year to slightly over $658.31 million.

Looming revival:

Research from Instinet analysts Daniel Adam, Brian Dobson and Harry Curtis reportedly forecast that Macau will likely be the first gambling market to begin recovering from the coronavirus-related global downturn following the end of a second quarter where aggregated gross gaming revenues are expected to have posted an around 80% year-on-year decline.

Protracted path:

The analysis indicates that casinos in the former Portuguese enclave are liable to see their combined gaming revenues fall by about 65% year-on-year for the third quarter of 2020 before posting a fourth-quarter diminution of approximately 60%. The securities firm purportedly also predicted that such businesses will likely finish next year sporting an analogous comparable drop in advance of seeing their revenues return to 90% of 2019 levels by the end of 2022.

Crucial caveats:

The Instinet research reportedly moreover detailed that all of its forecasts depend on the ‘soft’ opening from next month of the border between Macau and China via the at least partial reintroduction of the Individual Visit Scheme (IVS) and the speedy removal of a 14-day mandatory quarantine requirement currently in place for all visitors travelling between the two jurisdictions. From there and the brokerage purportedly proclaimed that the premium-mass and VIP sections of the casino market will ‘probably the first to recover’ as officials are likely to place ‘restrictions on visitation growth’ that will severely restrict mass-market play.

Reportedly read the Instinet research…

“Last week, Macau’s Finance Secretary Lei commented that the government envisioned ‘normalcy’ at the borders soon, which we think may be right in six to twelve months but it is too optimistic for 2020. The Hong Kong and Guangdong [Province] border crossing closings by Beijing two weeks ago, while a setback for gross gaming revenues, which were gaining traction in March, is one road sign that indicates Beijing is taking the risk of a second wave of infection seriously. Also, when the IVS system is restarted, it will be into a safe and controlled environment. There will likely be a recovery in 2020, but slow.”