Brokerage firm Sanford C. Bernstein Ltd. intimidated about a likely “significant” loss of VIP gambling customers for Macau in the second half of 2018.
On Friday, the institution noted that political and economic factors are most likely to hit the neighbouring country China, that provides potential customer to gambling sector in Macau, which in return will affect the number of customers visiting.
Vitaly Umansky, Zhen Gong and Cathy Huang, the brokerage analysts, said, “Although it is likely to continue to show strength over the next few months (or even the next two quarters in 2018), the VIP model is likely to face structural headwinds in the latter part of 2018 from instituted cooling measures on Chinese real estate, a credit tightening in China, an increasing [focus on] regulatory environment in Macau and continued Chinese government focus on capital outflows in China.”
“While growth will decelerate from 2017, 2018 will still show respectable growth (driven more by mass) and long term secular growth drivers are still in place,” said the memo.
“In 2018, we expect total GGR [gross gaming revenue] to grow 10 percent year-on-year, and VIP GGR and mass GGR will grow 8 percent year-on-year and 11 percent year-on-year respectively,” it added.
The official statistics for the last year VIP and mass segment growth rate for Macau will be not be announced until Macua’s GGR for fourth-quarter is not announced. The Gaming Inspection and Coordination Bureau, Macau gaming regulatory authority, is set to public the numbers during the second half of this month.
Investment bank Credit Suisse AG also said that Macau VIP GGR growth has decline since December.
China anti-graft
According to Chinese news agency Xinhua, a statement was issued following a meeting chaired by the President Xi Jinping of the Politburo of Communist Party of China (CPC) Central Committee, which noted, “the campaign to ensure full and strict governance over the Party and curb corruption shall not stop.”
The same committee is reported to have received a work report related to party anti-graft activity planned for 2018 from CPC Central Commission for Discipline Inspection.
Steve Vickers, a business risk consultant, anticipated that Macau will be a part of the anti-graft drive by China due to its huge potential of attracting VIPs.
Vickers noted: “Macau is easy to target [for criticism] but actually things are quite transparent here. You can see a lot. The [financial transaction] numbers are largely published.”
