Xi Nian Kuai Le: Happy New Year! It is Chinese New Year, the Year of the Rat. This year, the celebration runs from January 25 through February 4. It is said to be the largest migration of people on the planet. Typically, hundreds of millions Chinese travel as part of the Spring Festival and the beginning of a new year; they visit relatives, eat traditional foods, give gifts and visit important cultural landmarks like the Forbidden City. However, the Year of the Rat’s beginning is not a typical kickoff to the new year. In an unprecedented decision, the Chinese government has canceled all public ceremonies, closed key tourism spots and locked down Wuhan city and other cities in Hubei province. As many as 50 million people are currently restricted to their city. The cause, you may have heard, is the coronavirus.
If it were possible, this year might be renamed the Year of the Virus. Sometime in December, an unknown pneumonia-like illness was first reported in Wuhan, a city of 11 million people in central China. According to Business Insider, in the beginning Chinese police arrested several journalists for “spreading rumors”. Clamping down on reporting, however, only kept the virus a secret for a little while. On January 14, the news leaked out into the world through Hong Kong. The story gained steam as more cases were reported, especially as cases began to be identified in places other than Mainland China. Cases have so far been reported in Europe, the United States, Hong Kong, Macau, Singapore, Thailand, Vietnam, South Korea and Japan.
On Thursday, January 23, in response to the crisis, the city of Wuhan was locked down. Eleven million people are currently unable to leave town or use public transportation. The virus is thought to have jumped from animals to humans in the Wuhan Huanan Wholesale Seafood Market. Its name notwithstanding, the now-closed market sold live foxes, crocodiles, wolves, salamanders, snakes, bamboo rats, peacocks and porcupines, along with traditional meats and fish. (Wait, rats? We could call it the Year of the Bamboo Rat.) Okay, it’s not funny. Nothing about a pandemic is funny, and this one is becoming more serious by the day. The World Health Organization thinks it is still too early to declare an international emergency, but the world is watching.
Macau certainly is. The government has issued instructions to test the temperature of every person entering the city and is requiring the casinos to test every gambler. Dealers are required to wear masks, people are asked to avoid all public gatherings, and everyone is being asked to be vigilant. The Chief Executive of Macau has canceled all public New Year celebrations and has said that the casinos may be required to close if the threat becomes worse. At the rate new cases are being reported everywhere, it is virtually certain that the situation will get worse, both in Macau and elsewhere.
The casinos in Macau have already been hit by a slowing Chinese economy, the trade war between the U. S. and China, and the visit of Chinese President Xi Jinping. This week, casino stocks from Las Vegas Sands, Wynn Resorts, MGM and Melco have all fallen on the news of potential sanctions. A friend asked me recently if I thought this was a good time to buy Sands stock, since short-term stock price dips are, usually, hardly a cause of long-term concern. The question is more complicated than it was a few days ago, however. I said that if the spread of the virus is brought under control in a reasonable amount of time, the Sands should have a good year financially, which means a significant drop in price is a good buying opportunity. But if this is not a short-term crisis, well, then, all bets are off.
Before the outbreak, analysts predicted that a new bird flu – one transmitted from animals to humans in the live animal markets of China – could kill as many as 65 million people worldwide. That would hardly be a minor, short-term crisis, and the impact on casino revenues in Macau would barely be noted under those conditions, although some analysts are already speculating on the virus’ impact on stock markets and economies worldwide. Some domestic casinos rely very heavily on Macau revenues; the Sands gets as much as 65 percent of its revenue from Macau. Add to that number the importance of the Sands Singapore, and the corporation’s investments in what are now the virus’ environs means a major outbreak would be a significant event in the company’s existence. Wynn and MGM rely heavily on Macau as well, although somewhat less that the Sands.
Those of us who make our living in or around the casino industry see everything through the prism of casino revenue, but there are events in the world at large that sometimes eclipse ours. This virus has the potential to affect our lives at a much deeper level than revenues and stock prices. The Year of the Rat may ultimately be remembered only as the year that the annual migration did not happen. At the moment, the world is facing a much greater threat. I, for one, hope the Chinese government and health officials all over the world get a handle on this virus soon. 1997 began in Reno with a flood that disrupted business and closed many casinos; that flood changed the casino industry in downtown Reno permanently. This virus has the potential to change the entire world. That is frightening.
