Macau Casinos Post Second Month of Growth in September

In August of 2016, Macau’s casinos posted a slight 1.1% increase in year-on-year revenues, finally bringing to an end a 26 month losing streak dating back to May 2014. September’s result have now been released, and its further good news for the Chinese gambling hub with revenues rising once more, this time by an impressive 7.4% to $2.3 billion.
Even before August’s gain, Macau had reported four straight months of single-digit revenue falls, which was a marked improvement on past results which in February 2015 bottomed out at a 48.6% year-on-year decline. In 2015, Macau’s revenues subsequently plummeted by 34.3% to $28.93 billion, compared to the $44.1 billion collected in 2014.
While Macau’s September gambling revenues beat the 5% growth rate forecast by analysts, the island’s gambling establishments are still currently down by 9.1% to $20.4b for the first nine months of 2016. In addition, other analysts have questioned the sustainability of the recent growth, with some pointing out that much of the boost was due to the casinos’ credit line being extended to the VIP segment in order to encourage bigger betting. Conversely, Nomura analyst Richard Huang has pointed out that mass market revenues failed to return any significant growth from mass market players last month.
Consequently, all will eagerly be awaiting to see how October’s results pan out, especially with the annual Golden Week holiday beginning on October 1st. The 7-day holiday celebrates the founding of the People’s Republic of China, and traditionally sees a surge in mass market gambling. Whether this year’s celebrations are enough to offset weak market growth, infrastructure delays, and a fall in high roller gambling remains to be seen.
In the meantime, Hong Kong stocks rose on the better than forecast Macau revenue results, although China’s market is now shut for the Golden Week holiday. As Yen Chiu from China Securities International Finance Holding Co, explains:
“Gaming names are driven by good September results. But we will have to see if the rebound is supported by sufficient volume. The market will fluctuate as China is off this week, with turnover likely to decline.”

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