Is this a sign of things to come or just a case of the old January blues?
Despite still posting a seven-percent growth in gambling revenues, Macau’s January 2014 gross gambling total of 28.7 billion patacas has been interpreted as a disappointing number for the world’s biggest casino market.
So how can that figure, which converts to USD$3.6 billion, be seen as a letdown when the figure is already more than what all 12 casinos in Atlantic City earned for the entire year last year? Having high expectations that’s attached to its standing as the unquestioned gambling capital of the world is one reason.
See, after a record 2013 that saw Macau post revenues of over MOP 360.75 billion (USD$45 billion), a lot of analysts believed that the momentum would continue on to this year as shown by the 11-15 percent growth estimates a lot of these experts threw out before the numbers were added up. A 7-percent growth isn’t what these people saw on their crystal balls so you can excuse them for being disappointed with the final tally.
Then again, this is January, which traditionally is subdued because of the upcoming Chinese New Year holiday. It also didn’t help that the start of the Year of the Wooden Horse began on the last day of the month (January 31), so February stands to reap all the rewards from the holidays. Still and all, that 7-percent growth is the slowest gaming revenue increase since October 2012.
As a result of the lower-than-expected revenue growth in January, shares in Macau casino operators dropped in Hong Kong.
Sands China, a subsidiary of Las Vegas Sands, was the biggest loser among the six operators in Macau, losing 7.5 percent of its share value at the Hong Kong Stock Exchange. Just below Sands China was Lui Che Woo’s Galaxy Entertainment, which dropped its share value by 7.3 percent. Wynn Macau, a subsidiary of Wynn Resorts, also lost out on its share prices, thanks to a 2.8-percent drop in its value.
While the immediate drop in share value should be a cause for concern, the long term outlook is still pretty optimistic so there’s no reason for these operators t incessantly bite their fingernails.
Besides, the traditional slow start in year-on-year growth in gaming revenue in Macau isn’t a new thing for the first month of the year. In fact, of all the months in 2013, January 2013 also saw the slowest gambling revenue growth, accounting for only a 7.3-percent growth, and followed by February, which reported the second-lowest increase at just 11.5 percent.
Maybe its a case of analysts overestimating their expectations for the month. That’s a pretty valid reason that still shouldn’t be cause for sweaty palms. It’s only the first month of the year anyway, and if 2013 is an indication of what we can expect, March is usually the month where things turn for the better in Macau.
