Analysts: Xi’s visit already impacting tourism, gaming

Chinese President Xi Jinping and his wife Madame Peng Liyuan arrive in Macau on Wednesday

President Xi Jinping’s official visit has already impacted the city’s visitation and gaming results, analysts from Sanford C. Bernstein and JP Morgan said
Last week, brokerage Sanford C. Bernstein predicted that the average daily rate for the first eight days of this month would stand at about 16% lower than in December 2018 and 6% below that of last month.
Yesterday, the brokerage remarked in a note that “President Xi Jinping’s arrival […] has been causing a material disruption to the gaming industry (much more so than prior visits by senior officials and Xi himself in late 2014).”
Last month, Chinese authorities implemented stricter visa controls on visitation into Macau, limiting visits from higher frequency entrants.
This week, local authorities implemented tighter security measures, banning journalists from the neighboring region from entering, and suspending the newly opened Light Rapid Transit.
The frequency of the Turbojet ferry service between Macau and Hong Kong has also been decreased from every 15 minutes to every 30 minutes.
Sanford C. Bernstein also noted that the way money flows into the city has been tightened, with more security checks on moneychangers in the casinos, echoing recent concerns that ATMs may not be refilled during Xi’s visit.
“Additionally, there has been widespread concern (so far unwarranted), that ATMs may run out of cash and may not be refilled during Xi’s visit to Macau,” said analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu. They added that, “the Monetary Authority has said that ATMs will run as usual, but rumors have an effect on people in any event.”
Earlier in the week, online rumors about cash and fuel withdrawal restrictions led to long queues in town this week at banks and gas stations, as residents hurried to fill their wallets and their cars ahead of the anniversary weekend.
Rumors of the restrictions were circulating online as early as Monday, with claims that there was a shortage of cash in some of Macau’s cash machines. The rumors also claimed that gas refueling would be prohibited outside of a six-hour period starting at midnight.
The rumors were quickly shut down by the relevant authorities, which that the reserves of oil products and cash were ample in the city. The government also said it would pay close attention to the price of gas in response to the uptick in local market activity.
Gaming analysts from Nomura wrote last week that the gaming sector’s underperformance was probably “due to a step up in visa restrictions ahead of President’s Xi [Jinping]’s visit later this month, which is something we have been flagging since October.”
Further into December, the prevailing view is that the impact on visitation this month has been more severe than initially expected. After the weaker than expected gaming results in November, analysts expect December will fare poorly too. LV