Signs of recovery | Gaming snaps two-year drop to rise 1.1pct on new resorts

Macau reversed its 26-month slump in gaming revenue as new resorts attracted visits from recreational gamblers.
Casino shares rose, as investors now look to see whether operators can sustain the momentum through a key holiday week. Gross gaming revenue rose 1.1 percent in August to 18.8 billion patacas (USD2.4 billion), according to data from Macau’s Gaming Inspection and Coordination Bureau (DICJ) released yesterday. That followed a 4.5 percent decrease in July and beat the median estimate of a 1.5 percent drop by eight analysts surveyed by Bloomberg.
Gambling revenue in Macau has been falling since June 2014 amid China’s economic downturn and the government’s crackdown on corruption, which has scared off high-rollers from the mainland. Operators in Macau have been shifting focus to tourists and recreational gamblers by adding more non-gaming facilities as competition to attract visitors intensifies.
“We need to wait for at least one more month to see if growth can be sustained, and if new casinos will bring more visitors during the peak Golden Week,” China International Capital Corp. analyst Chris Kwai said in a telephone interview after the results. “Compared with no growth or even a slight drop, a slight uptick is a big impact on market sentiment.”
Wynn Macau Ltd. rose as much as 8.2 percent, the biggest intraday gain in more than a month, while Sands China Ltd. advanced as much as 4.6 percent. The benchmark Hang Seng Index rose 0.8 percent.
Macau’s nascent gaming recovery is being led by recreational gamblers, also known as the mass market. Gaming revenue for the segment recovered in July, rising 3.2 percent, compared with an 11 percent drop for the high-roller VIP market, according to data compiled by Bloomberg Intelligence.
There also concerns the raft of casino resorts being completed in the newer Cotai district will result in intense competition, especially for existing casinos on the Macau peninsula. Sands China Ltd.’s Parisian casino is due to open later this month, while MGM China Holdings Ltd.’s resort in Cotai is scheduled to open next year.
Wynn Palace, the $4.2 billion luxury casino featuring a $100 million synchronized fountain show and $200 million in art and Chinese antique pieces, is seen to be off to a slow start after its Aug. 22 opening. With Macau’s high-stake gambling segment still in decline, new projects such as Wynn’s are taking market share from the existing base, said Union Gaming Group LLC analyst Grant Govertsen.
“It has largely cannibalized other properties, including their own on the peninsula,” CLSA Ltd. analyst Marcus Liu said, referring to Wynn Palace. “The October holiday will be the true test of whether the new property, together with The Parisian, can grow the market.” MDT/Bloomberg