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Macau operators see significant uncertainty in short-term, VIP future bleak

Macau operators hinted at significant near-term uncertainty related to a host of issues, with a few even suggesting VIP play in Macau may never fully come back, Wells Fargo said in a note.

During meetings in Las Vegas held by WF, operators cited China’s currency devaluation and policy ambiguity as reasons to remain bleak along with junket liquidity issues and tighter policy towards Macau from the Mainland.

“Following Beijing’s devaluation of the yuan (CNY) some weeks ago, pundits speculate the [People’s Bank of China] may end support for its currency by December. The move would allow the CNY to depreciate freely and potentially ease pressures on central bank reserves.”

Other issues included seasonally adjusted decline in August revenues “reinforcing our view Macau is still in trend decline,” WF said.

Room rate checks pointed to average daily rates trending down 20 percent month on month in September, and last month at least eight VIP rooms shut down.

August Macau gaming revenue was MOP18.6 billion, down 36 percent year-on-year, and flat versus July.

“In our view, the market is still in trend decline. Unadjusted mass table revenue declined 30% yr/yr, junket volumes decreased 54% yr/yr, and VIP revenue was down 40% yr/yr. We expect September will see declines of roughly 36% yr/yr -- consistent with August.”


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