Gaming | Analysts: Xi Jinping visit to dampen December revenue

A consensus is forming among analysts that the upcoming visit of Chinese President Xi Jinping later this month will spell bad news for Macau’s visitor count and its casino revenues.

Gross gaming revenue dropped 8.5% in year-on-year terms in November to 22.87 billion patacas, the second-worst monthly posting of the year. Year-to-date gross gaming revenue up to November sits 2.4% lower than in the equivalent period last year.

Meanwhile, December was the third-highest monthly earner in 2018, recording city-wide revenue of 26.46 billion patacas and year-on-year growth of 16.6%. Even a moderate result for this month will fare poorly in year-on-year terms, given last year’s strong comparison base.

The average daily rate for gaming revenue in the first eight days of December was tracking as much as 19% lower this year, according to estimates provided by Nomura’s Instinet. At MOP713 million per day, the rate was also about 7% lower than in the first eight days of November.

Brokerage Sanford C. Bernstein advanced a similar estimate, predicting that the average daily rate for the first eight days of this month has stood about 16% lower than in December 2018 and 6% below that of last month.

As cited by gaming news website GGRAsia, analysts at the firm wrote in a note that the underperformance of the gaming sector 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.”

Credit Suisse said in a note last month that controls on exit visas for mainland Chinese residents wishing to travel to Macau was already in effect. The controls are thought to dampen visitor arrivals in Macau and by extension the mass market segment of the casino sector.

As previously reported, the outlook for gross gaming revenue in 2020 is considerably brighter, helped by easier comparisons and pent-up demand from the last quarter of this year.