Japanese financial giant Nomura has given the Macau casino market a vote of confidence by revising upwards its gross gaming revenue forecast of Asia’s premier gaming hub.
In a note published on Thursday, Nomura estimated that Macau’s casino GGR for 2017 will now rise by 12 percent compared to the previous year. The forecast was four points higher than the previous eight percent estimates it gave early this year.
The Japanese financial institution considered available data at hand in deciding to lift its outlook, including the first-quarter VIP GGR expansion, which contrasts with its earlier estimate of five percent sequential decline.
Data released Saturday by Macau’s Gaming Inspection and Coordination Bureau (DICJ) showed the special administrative region’s casinos earning gambling revenue of MOP 21.2b (US $2.65b) in March, an 18.1% improvement over the same month last year.
The DICJ won’t issue official Q1 breakdowns of how the VIP and mass market gambling performed individually until later this month.
“Macro improvements and subsided impact of the anti-graft campaign [in mainland China] continue to lift VIP demand,” Nomura said.
Nomura also using a steep rise in China property prices as a proxy for VIP gambling performance in Macau. Citing figures provided by Bloomberg and its own research, Nomura pointed out that China property prices are 10 percent higher in March 2017 compared to March 2015.
Analysts use Chinese property prices to gauge whether there is an improved liquidity for Chinese high rollers playing in Macau casinos on junket-issued credit.
The institution was also more bullish than the market consensus regarding the outlook for mass gambling.
“We remain confident about the mass market,” Nomura said. “In first-quarter 2017, we forecast mass GGR increase of 2 percent quarter-on-quarter, trailing behind 5 percent quarter-on-quarter increase in VIP GGR but still representing healthy growth of 12 percent year-on-year,” noted the institution.
While Macau’s VIP market has shown encouraging signs of rebounding following Beijing’s two-year-plus crackdown on corruption and capital flight, some analysts expect VIP activity to slow in the second half of 2017.
