Macau Casino Shares Rise After Visitors, Reported Support

  • Chinese travelers surge 21% in first two days of holiday
  • High roller visitation `still a question mark,' analyst says

Macau casino shares rose in Hong Kong trading after Chinese visitors to the world’s largest gambling hub surged during China’s Golden Week holiday and reports that the nation may move to support the city’s economy.

Galaxy Entertainment Group Ltd. rose 5.3 percent to close at HK$22.85, the highest level since Sept. 21. Sands China Ltd. gained 3.4 percent, with Wynn Macau Ltd. and MGM China Holdings Ltd. up more than 2 percent. SJM Holdings Ltd. climbed 1 percent. The benchmark Hang Seng Index rose 1.6 percent.

The former Portuguese colony has seen casino revenues fall for 16 straight months as China’s anti-graft campaign and a slowdown in the country’s economy deterred high rollers, or VIP gamblers, going to the city. The gambling downturn has dragged Macau’s economy 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 sequential increase from September. But the VIP I think is still a question mark from holiday weekend.” Monday’s casino stock surge could also be a follow-through rally from 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 Beijing will introduce more policies this year to support Macau’s economy, according to a report from Teledifusao de Macau. The city’s September gaming revenue also came in within analyst forecasts. 

Visitors from China, who account for more than two-thirds of the city’s total, rose 22 percent to 276,557 on Oct. 1 and Oct. 2, the first two days of the nation’s weeklong holiday, a traditionally peak season, according to data from the Macau Government Tourist Office. 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 the year, according to official data.

Macau’s gaming regulator announced late Thursday gross gaming revenue decreased 33 percent to 17.1 billion patacas ($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 more related to improve the tourism there.

“We do need some fundamentals. In general we are still waiting for the gross gaming revenue recovery,” he said.

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