Gaming shares plunge amid casino closures
As casinos closed for the first time in two years yesterday to curb the spread of infection, gaming operators saw their stocks plunge by up to 8%.
Over the weekend, authorities announced that a special lockdown will be imposed this week as Macau battles to contain the spread of Covid-19.
The city returns to its toughest pandemic restrictions, mandating that residents only leave their homes for essential reasons, with police officers patrolling the city to enforce this.
As the city adheres to the national zero-Covid strategy, authorities have shut down non-essential firms, locked down buildings where positive cases have been detected and conducted repeated rounds of mass testing to identify and isolate affected individuals.
Leading the stock market falls was Sands China, at a 8% decrease, while shares in Melco International, Wynn Macau, SJM, Galaxy MGM China, dropped between 6% and 7%.
Investor confidence has been hit hard as the closure came following three weeks of low gaming revenues due to the absence of tourists from neighboring regions.
The seven-day quarantine requirement for mainland residents arriving from Macau has discouraged travelers from coming to the city.
Brokerages have forecast that recovery in the gaming sector may not happen until the end of third or fourth quarter of this year.
“We would probably need to write-off July and likely August as well from the models,” said DS Kim, an analyst at J.P. Morgan.
Gaming analysts have also expressed the expectation that no casino operators would escape the economic fallout caused by the pandemic, expecting negative EBITDA in the second quarter for all six concessionaires.
International economic rating institution S&P Global Ratings expects that Macau’s 2022 end gross gambling revenue (GGR) will reach USD10.08 billion at most, citing the city’s largest outbreak.
Estimates given by brokerage Sanford C. Bernstein states that the average daily casino gaming revenues from July 1 to 10 stood at MOP20 million, which is a daily average of MOP2 million.
If this trajectory continues, driven by the one-week closure of casinos, the city could record its lowest casino revenues ever this month.
