A series of monetary stimulus measures unveiled by China’s central bank on Tuesday will likely be medium-term supportive of Macau’s gaming and tourism operators, according to Seaport Research Partners, despite the platform this week cutting its GGR estimates for September on recent weakness.
People’s Bank of China governor Pan Gongsheng surprised when he announced the stimulus measures, which include cutting short-term interest rates, reducing the amount of cash banks must hold, a reduction of rates on existing mortgages, liquidity to brokers and insurance companies and an increase in listed SOE share buybacks to stimulate the Chinese stock market.
In a note, Seaport’s Vitaly Umansky said the package was “likely to improve some sentiment around China and Macau” with markets already reacting positively to the news “as there were low expectations for any meaningful stimulus in the short term.
“The CSI 300 (China A share benchmark) rose 4.3% and the Hong Kong HSI rose 4.1%,” he wrote. “Macau stocks in Hong Kong were all up between 2.4% and over 6.6%. We expect US shares in our coverage to rise today on the news as well, even in light of a weaker than expected Sep GGR.”
Umansky, meanwhile, has cut his September GGR estimates from MOP$17.75 billion (US$2.32 billion) to MOP$16.75 billion (US$2.09 billion) due to recent weakness as a result of typhoons in the area impacting visitation.
The lower estimate brings expected GGR for the month back in line with historical trends and up 12% year-on-year, while it is hoped October will result in a strong surge on the back of the Golden Week holiday.
“We forecast October GGR to be MOP$21.5 billion (US$2.68 billion), a +10.3% year-on-year increase (+28% month-on-month),” he said.
“ Our estimate is based on a Golden Week GGR of MOP$950 million per day (+4% above May Golden week and 25% above Chinese New Year). This estimate is reasonable in light of strong hotel bookings and our discussions in Macau, along with historical trends.
“We expect November and December to follow normal historical trends, with December being a bit weaker than normal due to the expected visit of General Secretary Xi for one day.”
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