Macau Casinos Break 26 Month Losing Streak in August 2016

Macau’s casinos have broken an unprecedented slump in business after generating revenues of $2.354 billion in August, representing a slim but significant 1.1% increase compared to the same month in 2015. To put things into perspective, one would have to look back 26 month to May 2014 in order to find the last time China’s only legal gambling resort experienced year-on-year growth.
The welcome news comes after Macau’s casino market finally started seeing its revenue decline reduced to just single figures, or 4.5%, in July, compared to the double-digit falls noted in previous months. Commenting on the implications of August’s positive results, Lawrence Ho Yau-lung, Chairman of Melco International Development, stated:
“Going forwards, as Macau’s gaming industry has seemingly bottomed out and started to stabilise, we remain cautiously positive about its long-term outlook.”
Other analysts, however, have questioned whether the slight growth was in fact due to a small seasonal boost, and suggested, instead, that growth will continue to be affected by a number of negative factors, including tighter regulations imposed on VIP gambling, a weaker yuan, and increased competition amongst casinos. As BNP Paribas Gabriel Chan then explained:
“We are wary in the near term as these new casinos are likely to drive another round of margin erosion, because of insufficient gaming table allocation.. and increasing promotional expenses in the face of heightened competition.”
Nevertheless, investors welcomed the news of Macau’s return to growth in August, with casino stocks jumping yesterday after the results were released. Wynn Resorts stocks were higher by almost 4% at $93.17, Las Vegas Sands shares jumped by 7% to $53.81, MGM Resorts International shares increased 3.2% to $24.65, while Melco Crown Entertainment shares were up by 7.4% to $13.94. As a result, Wynn’s stock is currently higher by around 34% versus the same time last year, with Sands’ stock also rising by roughly 22% year-on-year.