On the heels of a lackluster July, and a generally low 2019, Macau’s gross gaming revenue (GGR) doesn’t appear to be set to improve anytime soon. Brokerage firms are predicting that the revenue will most likely be lower than it was in August of last year or, in the best of cases, only marginally better than last year.
Macau’s gaming regulator, the Gaming Inspection and Coordination Bureau (DICJ for its Portuguese acronym), said at the end of last week that July GGR had dropped 3.5% compared to July of last year to just $3.03 billion. Several brokerages, including Sanford C. Bernstein, Deutsche Bank, Nomura and JP Morgan Securities (Asia Pacific), have all weighed in on the current situation and the consensus is for a weak gaming economy this month.
Bernstein analysts assert, “Going into second half of 2019, we may see surprise on the upside if VIP rebounds. One area of potential high-end GGR stabilisation and renewed strength may come from a recovering credit cycle in China, which may support VIP recovery in the second half.” This improvement could be hampered by any negative movement in the current U.S.-China trade war, adds the firm.
Deutsche Bank isn’t as optimistic – it believes GGR in Macau will drop 4.8% year-on-year. The brokerage explains in its note, “Over the last seven years, August win per day has been about 3.1 percent stronger than the win per day in July. Given the July result (U.S. $98.7 million win per day), this math would imply a win per day in August of about U.S. $101.8 million and a full-month result of about U.S. $3.16 billion, down 5.1 percent year on year, and a two-year stack comparison of plus 11.2 percent.”
Nomura is on par with Deutsche Bank for the month and is still holding out for a better September. Its analysts asserted in their industry brief, “August should mark the last of the tough comparisons in Macau. The about 0 percent to 5 percent year-on-year decline we estimate for August is roughly consistent with July’s minus 3.5 percent year-on-year change. However, we expect positive GGR growth to resume in September, given much easier one-year growth comps for the balance of the year.”
JP Morgan doesn’t think much is going to change this month. It predicts that GGR will only be between 1% lower to 1% higher than August of last year, basing its assumption on possible typhoons in the area and the political unrest currently found in Hong Kong.
Macau was already threatened by one typhoon this year, and several more named storms are expected during the season. Typhoon Wipha looked to be set to attack the city at the end of last month, causing flashbacks of the Category 10 storms that have hit the past two years, but changed its course and broke up before reaching land.
