Las Vegas Sands, Wynn Surge as Macau Ends China Travel Quarantine Policy

The broader universe of US-listed gaming equities is struggling Tuesday. But those with Macau exposure are standing out, after the special administrative region (SAR) halted its coronavirus quarantine policy applicable to travelers arriving from mainland China.

During Asia’s Tuesday trading session, Sands China traded as high as 10 percent, while MGM China and Wynn Macau flirted with double-digit gains on news of the quarantine protocol being lifted. Some of that momentum is carrying over to US trading today, with Melco Resorts & Entertainment (NASDAQ:MLCO) leading the way with a gain of nearly six percent in midday trading.

This probably signals that China is increasingly comfortable on easing travel restrictions after the Spring Festival, and hence, this is directionally positive,” said JPMorgan analysts in a note to clients.

“Similarly, we’d expect cross-provincial travel restrictions (or discouragement, to be more exact) to be gradually removed, which in turn should help improve sentiment/confidence on long-haul and cross-border travels,” the analyst continued.

Las Vegas Sands (NYSE:LVS) is higher by 3.21 percent, while MGM Resorts International (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN) are both up more than four percent. Las Vegas Sands is the largest Macau operator. Those three companies and Melco are four of the six Macau concessionaires, and the only ones with listings on major US exchanges.

Good Time to End Macau Quarantine

The SAR’s decision to scrap the health care protocols applied to Chinese visitors comes amid budding signs of a rebound in the world’s largest casino center.

Volumes among high-end players are forecast to rise five percent from January. That’s beneficial to operators such as Melco and Wynn, which have heavily premium mass and VIP client bases.

“Demand acceleration itself was well expected, but this is a strong print that exceeded our and the market’s expectations,” said the JPMorgan analysts. They referred to momentum accrued towards the end of the Chinese New Year celebration.

Why It’s Important

Mainland China is, by far, Macau’s most vital feeder market. Last month, 556,765 visitors arrived to the SAR, of which 496,157 hailed from the mainland. More than 432,000 of that group entered Macau through border crossings, indicating many residents of the mainland remain reluctant to fly or travel by boat in the wake of the pandemic.

However, Beijing recently upgraded several regions to “low risk” from “high” or “medium”, signaling it’s confident the world’s largest country has COVID-19 under control.

The next step in the Macau recovery process is the restoration of the e-visa process for the Individual Visit Scheme (IVS). Of the 556,765 January visitors, just 174,554 arrived under IVS permits, confirming that in-person application and long approval times are hindering the gaming hub’s rebound.