Gaming | Casino shares rise after ‘golden week’

Aspect of the Galaxy Macau casino resort

Macau casino shares rose in Hong Kong trading after the government released statistical data indicating that the number of Chinese visitors to the world’s largest gambling hub increased during China’s “golden week” holiday. According to Bloomberg, the stock rise may be related to Li Gang’s statements last week, indicating that China may move to support the city’s economy.
Galaxy Entertainment Group Ltd. rose 5.3 percent to close at HKD22.85, its highest recorded level since Sept. 21. Sands China Ltd. gained 3.4 percent, with Wynn Macau Ltd and MGM China Holdings Ltd both up by more than 2 percent. SJM Holdings Ltd. climbed 1 percent. The benchmark Hang Seng Index rose 1.6 percent.
Macau has seen casino revenues fall for 16 straight months as China’s anti-graft campaign and a slowdown in the country’s economy deter high rollers, or VIP gamblers, coming to Macau. The gambling downturn has dragged Macau’s economy down to its weakest performance since 2011.
“I believe that the mass-­market trend over the holiday was pretty good,” said Grant Govertsen, an analyst at Union Gaming Group, referring to the lower-end players.  “The gaming revenue number will show us a sequential increase from September. But I think the VIP still has a question mark over it from the holiday weekend.” Yesterday’s casino stock surge could also be the resulting rally of a Chinese official’s reported comments on possible support measures for Macau, he said.
Shares of Macau’s casino operators spiked on Friday after Li Gang, director of the Chinese government’s local liaison office, said that Beijing will introduce more policies this year to support Macau’s economy. The city’s September gaming revenue also came within analysts’ forecasts.
According to data from the Macau Government Tourist Office, visitors from China, who account for more than two-thirds of the city’s total tourists, rose 22 percent to 276,557 on October 1 and 2, the first two days of the nation’s weeklong holiday, which is traditionally peak season. That was compared with a growth rate of 4.3 percent for the same period in 2014.
The total number of travelers to the city in those two days rose 13.4 percent to 327,186 from a year earlier, the tourist office said. Visitors from the mainland have dropped 4.1 percent for the first eight months of this year, according to official data.
Macau’s gaming regulator announced late Thursday that gross gaming revenue had decreased by 33 percent to MOP17.1 billion ($2.1 billion) last month, narrowing from August’s 35.5-percent drop. Analysts are expecting a 32-percent slump in 2015 before rebounding next year, according to a Bloomberg survey.
“It’s a surprise that share prices have gone up so much,” said Chris Kwai from China International Capital Corp. “No matter what the central government brings to Macau, it’s usually related to improving the tourism there. We do need some fundamentals. In general we are still waiting for the gross gaming revenue recovery,” he said. MDT/Agencies