Macau’s Growth Slows as January Figures Dip Below Expectations

Posted on: February 1, 2017, 05:00h. 

Last updated on: February 1, 2017, 05:53h.

Macau’s recovery slowed in January. Figures released by the enclave’s Gaming Inspection and Coordination Bureau on Wednesday reported a growth rate of just 3.1 percent for the month, way behind December’s 8 percent and November’s 14.4 percent.

Macau growth slows in January
Early numbers indicate that Chinese New celebrations in Macau may have gotten off to a slow start, although we will need to wait for February’s figures to gain a clearer picture. (Image: Panoramio)

It’s also significantly short of the 8.5 percent median prediction of analysts recently polled by Bloomberg. Overall gambling revenue came in at 19.3 billion patacas ($2.4 billion), the bureau said.

Growth is growth, however, and, for a market that recently experienced 25 months of plunging revenues, the figures represent the sixth straight month of gains. They are also a reminder that Macau’s recovery will be gradual and that consumers are still concerned about the slowdown in the Chinese economy and Beijing’s anti-corruption drive which has imposed controls on the money flowing into the gambling hub.

Slow Start to Spring Festival

January’s numbers also indicate a slow start to the Chinese New Year holiday, which this year began on January 27th, although visitor numbers were still up over last year’s during the first five days of the festival. And since festivities continue up until the Lantern Festival on February 11th, figures released next month are likely to give a better picture of the impact on the economy.  

“The recovery during Chinese New Year and February can be sharper…,” JPMorgan analyst DS Kim wrote in a note. “We believe the disappointing January was more a blip than a trend.”

Macau has diversified its economy since the crackdown by Beijing, with a wave of new resorts that have an emphasis on family-friendly attractions, as it reinvents itself as a destination for the Chinese middle-classes.

Economy More Resilient

Three new casino resorts have opened in the last year alone, most recently Las Vegas Sand’s opulent $2.7 billion Parisian Macao on the Cotai Strip.

Meanwhile, Lawrence Ho’s Studio City, Steve Wynn’s Wynn Palace, and Galaxy Entertainment’s recently completed phase 2 on Galaxy Macau, have all added to the landscape.

The mass market has been the main driver of Macau’s bounce back, with figures showing the segment growing 7.3 percent in the final quarter of 2016. But there is also a suggestion that the VIP gamblers are slowly returning too. 2016 saw a definite improvement in the VIP segment over the previous year.

Across the entire year, the segment accounted for 53 percent of Macau’s overall gaming revenue, although that’s still far short of the 73 percent of its 2011 peak.

“The worst is over,” Michael Ting, a Hong Kong-based analyst at CIMB Group, told Bloomberg, “but Macau’s recovery is going to be quite volatile and choppy.”