The stock values of Nevada-based casino operators in Macau were given a boost Monday when the region exceeded expectations with an 8.5 percent gaming revenue increase in November.
But a 90-day cease fire in the ongoing trade war between the U.S. and China, agreed to over the weekend by President Donald Trump and Chinese President Xi Jinping at the G-20 summit in Buenos Aries, Argentina, also helped spoke the market.
The news helped to alleviate concerns surrounding Macau. Casino operators listed on the U.S. stock markets jumped up.
Wynn Resorts, traded on the Nasdaq, closed at $119.79, up $10.39, or 9.5 percent. Meanwhile, Las Vegas Sands closed at $58.34, up $3.40 or 6.19 percent; and MGM Resorts International closed at $28.02, up $1.06 or 3.93 percent. The companies are traded on the New York Stock Exchange
Hong Kong-based Studio City International, which also traded on the New York Stock Exchange, closed at $17.48, up $2.84 or 19.4 percent.
“We expect the results of the G20 should allay Chinese macroeconomic concerns for the time being, and present a positive outcome for our related stocks,” Jefferies gaming analyst David Katz said Monday.
Trump agreed to hold off for 90 days on a 25 percent U.S. tariff increase on $200 billion worth of Chinese goods that was scheduled to start Jan. 1. China agreed to buy a substantial amount of U.S. goods from the agricultural, energy and industrial sectors.
Macau gaming revenue rose for the 28th consecutive month in November, reaching $3.31 billion, according to figures released Saturday by Macau’s Gaming Inspection & Coordination Bureau. The market is up almost 14 percent over 2017’s $33.25 billion revenue year, but still far below the apex of $45.1 billion in 2013, which was followed by three straight years of declining results.
“In a market driven by momentum, Macau’s November gross gaming results result should be viewed positively given the negativity around Macau in general right now,” said Stifel gaming analyst Steven Wieczynski.
The focus, however, remains on the overall Chinese economy.
Wieczynski said investors still have “lingering uncertainties” with China’s overall economic health, which has slowed high-end play and could hamper middle income Chinese residents from visiting the region’s only legal casino market.
“We expect Macau operators’ shares to remain somewhat range bound until additional data points confirming the overall direction of the Macau gaming market emerge,” Wieczynski said.
Union Gaming Group analyst Grant Govertsen, who is based in Macau, said the market’s junket operators, who are tasked with bringing high-end customers to casino’s private gaming salons, haven’t “hit the panic button.”
“Most are still seeing growth and are cautiously optimistic about their prospects,” Govertsen said.
He expects the Macau market to be a “single-digit” gaming revenue growth story over the next few months.
“The most likely scenario remains a decent mass market story – low double-digit growth – and a mixed (high-end) story with modest growth,” Govertsen said,
One catalyst that didn’t materialize yet was the late October opening of the $20 billion Hong Kong–Zhuhai–Macau Bridge. The 55-kilometer bridge–tunnel system is the world’s longest sea crossing bridge and shortens the travel time between Hong Kong and Macau by 30 to 40 minutes.
Govertsen said the bridge may take “many quarters, if not years,” to have a material impact of the Macau market.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
