Macau casino operators got their first good news in over a year after a report claimed China planned to offer the beleaguered gambling enclave a helping hand.
On Thursday, the Teledifusao de Macau (TDM) television network quoted Li Gang, director of China’s local liaison office, saying that the government in Beijing would introduce support policies intended to revive Macau’s casino industry, which this week reported its 16th straight month of gaming revenue declines.
That China would look to help Macau is highly ironic, given that it was largely policy decisions in Beijing that contributed to Macau’s decline. Shortly after President Xi Jinping assumed office in 2013, he began a widespread crackdown on corruption among public officials and private individuals attempting to flout China’s strict rules on taking currency out of the country.
The crackdown, coupled with the general economic slowdown in China, has resulted in a drastic reduction in Macau’s VIP gaming industry, which has fallen from over 70% of overall gaming revenue to just 55% in Q2 2015, leaving the city’s junket industry in turmoil.
The measures reportedly being considered by Beijing are more focused on developing Macau’s mass market, such as relaxing restrictions on multi-entry permits and extending the individual visit scheme to more Chinese cities. Macau currently still receives the majority of its mainland visitors from neighboring Guangdong province.
Beijing’s approach to Macau can charitably be described as schizophrenic. News of the promised helping hand came just days after the government imposed new annual limits on UnionPay card cash withdrawals by Chinese residents traveling abroad – a move that is forecast to have a negative impact on mass market gaming revenue. Meanwhile, the local government is pressing ahead with plans to impose a blanket smoking ban, which analysts suggest could further depress revenue by 4.6%.
Regardless of the non-specificity of this latest news, Macau casino operators enjoyed some serious share price jumps on Friday. Wynn Resorts surged nearly 23%, its biggest single-day gain in six years. Melco Crown Entertainment rose 14%, Las Vegas Sands and Galaxy Entertainment Group both rose over 10%, while MGM Resorts and SJM Holdings made do with gains of 6%.
Earlier in the week, MGM Resorts CEO Jim Murren had expressed optimism that Macau had a bright future ahead of it. “Is there any reason why the central government would desire Macau not to grow longer term? I can come up with none.”