Macau’s Economic Contraction Eases as Gambling Slump Abatesby
Eighth consecutive quarterly GDP decline narrows to 7.1%
Signs of casino revenue bottoming amid shift to mass market
Macau’s two-year economic downturn continued to ease in the second quarter as a gambling slump in the Chinese city, home to casino units of Las Vegas Sands Corp. and Wynn Resorts Ltd., showed signs of nearing a bottom.
The city, which relies on gamblers for about two-thirds of economic output, saw gross domestic product contract 7.1 percent in the three months through June from a year earlier, government data released Tuesday showed. That compared with the 13.3 percent drop in the three months through March.
Macau’s economy has been pummeled as gambling revenue plunged 26 straight months in July after China’s crackdown on corruption scared off high-stakes VIP gamblers. City officials have sought to diversify the economy by pushing operators to build family-friendly resorts that offer more entertainment options aside from gambling.
Macau gaming stocks mostly advanced before the economic data was released, led by Sands China Ltd. which rose 3.5 percent to HK$31 by the close of trading in Hong Kong. The Bloomberg Intelligence Macau gaming stocks index rose 1.4 percent.
The gambling slump has seen signs of easing in recent months with the shift to new resorts that focus on tourists and recreational gamblers. Galaxy Entertainment Group Ltd. last week reported better-than-expected earnings boosted by its new resorts. Wynn Palace opened this month while Sands China Ltd.’s Parisian will debut mid-September.
Gross gaming revenue fell 9.2 percent in the three months ended June, the smallest drop since the third quarter of 2014. That comes as revenue at gaming tables frequented by recreational gamblers, also known as the mass market, narrowed to 1.1 percent following casino operators’ shift to target tourists. By contrast, VIP baccarat -- the favored card game for high-stakes gamblers in Macau -- plunged 15.7 percent.
Macau, the only city in China where casinos are legal, is expected to announce gaming revenue for May as soon as Thursday.