Macau Casino Stock Recovery A Long Way OffFebruary 20, 2017 1:26 pm
In August of 2016, Macau’s casinos returned to positive growth, in the process breaking their 26 month-long losing streak. Since then, China’s only legal gambling destination has continued its winning ways with six consecutive months of year-on-year revenue increases, and currently the Bloomberg Intelligence Macau index shows that stocks in the island resort are currently 69% higher than its five-year low recorded in January 2016.
The downward slide arose after the Chinese government targeted VIP junket operators in its efforts to rein in the outflow of money from the country. As a result, Macau’s gross gaming revenues declined from $45 billion in 2013 to just $28 billion in 2016, and now rather than appealing to the increasingly elusive high-roller market, casino companies are having to pursue the example of Las Vegas by offering more family friendly resorts with mass-market appeal.
Despite the upward trend, however, financial analysts have warned that the $146 billion wiped off shares following the exodus of high rollers from Macua over the past three years is unlikely to be restored by a greater number of recreational gamblers and tourists visiting Macau. That said, Macau’s resorts need all the help they can get in order to put their businesses back on track, and recently the Macau government has announced that it was considering retaining its smoking lounges inside of the island’s casinos. This goes against the zero-smoking stance that the government had been considering introducing, and as the Health Bureau recently stated:
“To allow smoking lounges with stricter technical standards – instead of completely banning smoking inside casinos – might be the way that suits all parties involved.”
Certain new stringent standards will be required of the smoking lounges, though, with their effectiveness subsequently reviewed after a three-year grace period. Furthermore, the Health Bureau has proposed that the special smoking exemptions currently permitted for Macau’s VIP rooms should also be annulled.