Macau Casino Stocks Still Face Long Odds
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After a brutal downturn during the early months of , Macau’s casinos will likely see more visitors soon. That doesn’t necessarily make casino stocks a winning bet—at least not for a while.
After , the gambling hub is finally seeing a glimmer of hope. Starting Wednesday, Chinese authorities will resume issuing tourist visas for visitors to Macau from across China. Visits to Macau had already picked up after restrictions on travelers from nearby Guangdong province were relaxed last month: Total visitors to Macau tripled in August from July, even though they were still 94% lower than a year earlier. Now visitors from the rest of the mainland will give the semiautonomous Chinese city another boost. Macau’s gambling revenue since February has , even though it has had no local transmission of Covid-19 for nearly six months.
But recovery is unlikely to be V-shaped. Many Chinese tourists may decide to put off Macau trips until travel becomes easier: Visa processing takes longer than before and would-be punters also need to obtain negative test results for Covid-19 before travel. Shares of six Macau casino operators have dropped 8% on average this week as hotel bookings for Golden Week, a Chinese holiday that begins next week, have been lower than expected.
Another worry is China’s increased . Beijing has identified such capital flows related to gambling as a national-security risk and local authorities in recent months have busted many online gambling platforms and underground banks, which help funnel money into Macau. That could hurt Macau’s VIP business, which made up nearly half of the city’s gambling revenue last year, even if casual gamblers have started to return. Junket operators, which , may also be experiencing a liquidity crunch with heightened regulatory scrutiny and loss of business.
Macau is finally seeing the end of the tunnel. But a quick recovery still faces long odds.
