Fitch Ratings: low single-digit growth rate for city’s GGR

Fitch Ratings has predicted that the city’s casino industry will only record single-digit growth in 2020.
Colin Mansfield of Fitch Ratings said in an interview with CNBC that short-term uncertainties are set to affect the SAR’s gaming sector, noting that the main factor would be the macroeconomic conditions in China, namely the US-China trade war.
“What we’re seeing right now is [the trade war] having an impact on the VIP business there right now. The good thing is that the mass market is performing quite well [and] you’ve had some new supply coming in the market in the last year,” said Mansfield.
“To specifically address that segment, we are forecasting a low single-digit growth rate for 2020,” he added.
Fitch Ratings expects that the city’s VIP business will “remain flat,” citing some potential downside risks if things escalate further in the US-China trade war.
According to Mansfield, citing China’s gross domestic product, Fitch Ratings is expecting a “China GDP-style growth for the mass gaming market” in Macau next year.
“Our economists have a 5.7% growth rate for that segment for 2020. So that comes out to be about a low-single digit [percentage GGR] growth for Macau in 2020 in our forecast,” he said.
Meanwhile, Mansfield said that the increase of mass-market visitors in Macau would support the SAR’s mass-market gambling segment.
“We see the mass market as a longer-term positive that’s impacted by things like growing wealth creation in China, and infrastructure improvements in the Greater Bay Area,” said the analyst.
Earlier, in October, JP Morgan Securities (Asia Pacific) stated in a note that “There’s a good possibility that 2019 marks a cyclical bottom [for Macau’s casino sector], and that demand can rebound into 2020 on easy [comparisons], better liquidity in China, and [the] alleviation of 2019 headwinds.”
Meanwhile, the International Monetary Fund also said last month that it expected Macau’s gross domestic product to contract by 1.3% year-on-year in 2019, and 1.1% in 2020.
On Friday, data from the Gaming Inspection and Coordination Bureau stated that Macau’s gross gaming revenue recorded a 3.2% year-on-year decrease in October to MOP26.43 billion ($3.28 billion).
The figure shows a contraction of 1.8% year-on-year for the first 10 months of 2019, showing further weakness amid China’s economic slowdown.