Macau Coronavirus Cases up to 7, China, Hong Kong Limit Travel, Dealing Severe Blow to Gaming Companies
Posted on: January 28, 2020, 08:11h.
Last updated on: January 28, 2020, 08:46h.
Already reeling from the spread of the coronavirus, Macau and the gaming companies that dominate the Special Administrative Region’s (SAR) economy were dealt another blow Tuesday. That’s when mainland China and Hong Kong announced a series of restrictions limiting travel to the gambling center.
On news that the number of confirmed cases of the deadly respiratory illness on the peninsula is now up to seven from six yesterday, authorities in Beijing will reportedly cease issuing Macau visitors visas.
Visa restrictions previously hampered gross gaming revenue (GGR) on the peninsula. For example, the mainland limited visits to the world’s largest gaming center starting in late November. It’s a policy that extended through the end of 2019, ahead of a late December visit by Chinese President Xi Jinping to commemorate the 20th anniversary of the handover of Macau to China from Portugal. As a result of that policy, November and December were two of the worst revenue months of 2019 on the peninsula.
Adding to the headwinds for Macau tourism and gaming companies, the Hong Kong Maritime Department said today that starting on Thursday, Jan. 30, it will significantly reduce the number of ferries ushering passengers between the two SARs.
Rail travel and tour buses heading to the gaming hub will also be reduced, while flights originating on the mainland heading to Macau will be slashed by 50 percent in an effort to contain the spread of the coronavirus.
Dubbed the “Wuhan virus” because it’s believed it originated in the city that’s the capital of the Hubei province, the illness has reportedly infected more than 4,500 around the world, and the death toll in China is now 106, meaning that number surged by 60 percent overnight.
It is also rapidly spreading in Macau. The seven confirmed cases there may seem like a small number compared to the amount in central China, but that’s seven cases up from just one on Jan. 22. A viral outbreak would never be well-timed, but the 2020 coronavirus epidemic started just before the arrival of the Chinese Lunar New Year, which was expected to lift visits to Macau, providing a foundation for a strong start to 2020 after GGR there languished last year.
Analysts are forecasting a huge drop in Macau gross gaming revenue for the January-February period, but are also quick to note how quickly the sector has bounced back from other outbreaks in the past,” according to Seeking Alpha.
The outbreak is taking a toll on gaming equities. Over the past week, shares of Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN), two of the largest Macau operators, are lower by an average of 16.43 percent, though both stocks are trading slightly higher at this writing.
Already Slowing Down
While the Hong Kong ferry reduction isn’t scheduled to go into effect until Thursday, a document obtained from the SAR’s maritime department indicates that, as of this writing, no vessels are scheduled to leave that port for Macau today.
That’s important, because Hong Kong is a major thoroughfare for mass market gamblers entering Macau, the demographic that was expected to prop up GGR until VIP revenue bounces back in the second half of the year.