As we sit down on the morning of the 1 October national holiday, and Golden Week is now upon us, it provides a moment to take a breath and reflect on exactly where Macau is.
For those of us living in Macau right now, you’d be forgiven for thinking the sky had fallen in. In the past 16 days we’ve seen 26% (over US$18 billion) of the market capitalization of the Hong Kong-listed entities of our six concessionaires wiped out in a single day, eight new cases of COVID-19 (six local security guards, and imported cases from a Hong Kong resident and a Macau resident), the second instance of a citywide compulsory three-day mass COVID test and a flurry of activity and concern surrounding the re-writing of the city’s gaming law and subsequent concessionaire re-tendering process, the first such process for 20 years.
According to at least some particularly pessimistic US and Hong Kong based analysts and mainstream financial media, Macau is now “uninvestable” due to the uncertainty surrounding our gaming industry.
We were dealt another small blow overnight, when the 14-day quarantine requirement for people crossing the border from Macau into Zhuhai was kept in place, despite widespread expectations it would be lifted from midnight at the start of today.
But this 1 October national day morning, let’s stop staring at the trees, take a step back, and assess the whole forest. Let’s take a 30,000 foot-view of where we are at, and where we are likely to be headed. From a clear-eyed point of view, there is actually quite a bit to be thankful for.
The three-day mass COVID test returned 100% negative
This raised hardly any column-inches in the press, because I suspect it was widely expected after the previous mass testing in August also returned 100% negative results, but this is an extremely good sign for Macau. There really is no COVID out there in the community. All the positive cases in this past week were from people who were already in quarantine when their positive results arose, and seemingly did not infect people in the community.
The mass testing ran remarkably smoothly
Remember all the angst from the first mass NAT testing? Remember the confusion, the queues, the complaints? There was none of that this time, it all ran very smoothly with hardly any queueing. My own test took less than five minutes from walking in to walking out! Congratulations are due to the Macau government on this. And if we must do this again at some point in the future, it seems it is now a relatively smooth process.
Macau is arguably the most COVID-safe place in the world
The Macau government really has done an extraordinary job protecting Macau society. Zero deaths and just 71 cases since the start of COVID in late January 2020. Along with four Pacific Island nations – Micronesia, Samoa, the Solomon Islands and the Marshall Islands – Macau is the only place in the world with zero fatalities and under 100 cases per million population, of the 221 countries and territories of the world tracked by Worldometers.info. And those Pacific Island nations don’t have tens of thousands of visitors every day like we do in Macau. Take a moment to compare us to other places around the world experiencing hundreds, thousands or even tens of thousands of cases daily. Don’t lose sight of how safe we are in Macau.
The fundamentals of our IR industry have not changed
We are still located right next door to mainland China with its 1.4 billion people and its richest province of Guangdong with a population of 125 million. The Chinese propensity to gamble and the general rise in wealth of China and its rapidly expanding middle class have not changed. And we still have the most magnificent and desirable integrated resort (IR) destinations in the world, with numerous additions and improvements planned for the years ahead. This is all going to stand us in good stead as we move into the 2020s.
Clarity may be coming sooner than we think
It was widely believed that the government would extend the current casino concessions for perhaps two or three years, but there are at least two signals that we might actually see the re-tendering process all wrapped up by 26 June next year, when the current concessions expire. Firstly, the speed of the 14 September press conference, less than 48 hours after the 12 September Legislative Assembly elections results were finalized, and secondly, the 45-day public consultation process is 15 days less than the 60-day public consultation process for the recently announced five-year development plan. Maybe the Macau government really wants to get this done without any extension? If we do see long-term clarity by the middle of next year, this will be a boon to the city’s gaming concessions.
The status quo of six concessionaires post re-tendering is a strong favorite
With all the speculation flying about how many concessionaires there will be after the re-tendering process, and which companies might be affected, it’s easy to lose sight of the fact that the vast majority of informed opinion is that we will see the status quo of the existing six concessionaires maintained. Should that happen, as is widely expected, it is a massive positive for the market value of those six companies.
Pent up demand
If there’s one thing Las Vegas (and other places) have taught us, it is that pent-up demand is a real thing. Vegas is currently seeing all-time highs in its GGR – the place is booming. The US has now essentially fully opened itself up, and in their post-COVID euphoria, demand for visiting Las Vegas is through the roof. I suspect the same thing will occur in Macau.
A final thought
People love to speculate about disaster. Doom and gloom sells in the media more than optimism does. People love drama, and love to complain. But on today’s holiday, I suggest we all take a moment to reflect on what is good in Macau. We are safe here and our long-term market fundamentals are extremely strong. While it might not feel like it right now, things can turn around quite quickly, and there may be many happy days ahead of us in the years to come.
