Home Gaming News Macau Casino suffering due to Chinese Economy slow down

Macau Casino suffering due to Chinese Economy slow down

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Macau suffering due to China Economy slow down

Things are unfortunate for Macau than it seems. The coronavirus has caused casino shares to plunge due to travel bans, but the long term impact of the virus could make things even worse. Slowdown of the Chinese economy is the real threat.

The immediate threat is in restrictions on travel. Even if the coronavirus is contained, a prolonged slowdown of the Chinese economy would weigh on gaming revenues. Over the coming months, we expect Macau’s services exports (which accounts for approximately 80 per cent of GDP ) to take a hit as the coronavirus epidemic will significantly impact tourist arrivals from the Mainland.

But the knock-on effect to the Chinese economy, and what that means to VIPs who would normally visit Macau, is the long term nightmare some are starting to realize.

Currently forecast China’s real GDP growth to slow to 5.9 per cent in 2020, from 6.1 per cent in 2019. Indeed, gaming revenues have already contracted by 2.5 per cent y-o-y over in January-November 2019 amid slowdown of the Chinese economy.

That’s not all, the forecasts could get even worse. Macau casinos are current shut down for a period of no less than 15 days, to help deter the potential spread of the coronavirus. That closure period could go on longer. Given that a vaccine to the coronavirus has yet to be found, a significant risk of an extended closure of the casinos.

This, added to Macau’s new focus on re-aligning with China’s interests, could also mean a severe lack of cash available to the region. However, given that gambling remains illegal in mainland China, Beijing could implement measures to tighten scrutiny of funds flowing from Macau into the mainland. This could introduce greater bureaucracy into the system and deter investors.

That doesn’t mean cash won’t be available at all. With Macau shares hitting lows they haven’t seen in some time, this might be the perfect opportunity to invest.

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