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Credit rebound could stabilize high-end play: Bernstein

An uptick in credit impulse in China seen in early 2019, if sustainable, could help to stabilize high-end play in Macau and overall GGR growth, said Bernstein in a note on Friday.

Credit Impulse is a measure of the change in credit growth, which is measured as the change in new credit issued as a percentage of gross domestic product (GDP). It is a useful predictive indicator for GDP growth and other macroeconomic data.

According to Bernstein, there is a link between credit, auto sales, and Macau gaming revenues.

“Chinese auto sales and Macau GGR are closely linked. Both sectors tap into a cohort of high-end consumers and are heavily influenced by prevailing credit conditions. In 2018, both sectors suffered as the government's deleveraging campaign constricted credit growth. In autos, this manifested itself in lower availability of auto financing; in Macau, the link is via players' personal liquidity and the junkets' role in providing liquidity.

“On a leading basis, Credit Impulse has some correlation with VIP GGR (and by extension, high-end Premium Mass). The more recent uptick in credit impulse seen in early 2019, if it is sustainable, may help stabilize high-end play in Macau,” said the brokerage.

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