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Nov. GGR trends indicate Macau still in decline, Wells Fargo says

Market checks suggest gross gambling revenue will record a decline of about 32 percent to 35 percent in November year-on-year, with the market also falling more than the historical norm on a sequential basis, indicating a continuing downward trend, according to Wells Fargo.

The firm has reduced its Nov. forecast from a decline of between 30 percent to 34 percent.

“We estimate month-to-date revenues are down 38 percent versus the first half of November last year. Importantly, we estimate month-to-date revenues are down 19 percent from October's 647 million MOP ($81 million) average, versus an average 11 percent mth/mth decline - suggesting the market is still in trend decline,” it said.

Wells Fargo said it expects no V-shaped recovery “as the credit-induced bubble of the past five years continues deflating, and Chinese policies continue to suppress growth.”

Projections of a further decline come despite the opening of Melco Crown Entertainment’s Studio City property, which had been expected to drive visitation.

The firm also pointed to another potential headwind from speculation China may further devalue its currency. It noted the central bank has been withdrawing support to alleviate pressure on reserves, causing the renminbi to slip 1.1 percent over the past 15 days.

“Note a weaker CNY reduces Chinese gamblers' purchasing power in Macau, with the Macau pataca pegged to the US dollar,” it said.


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