World Cup could lead to weaker summer GGR growth: MS

The upcoming World Cup could result in weaker than expected GGR growth in the summer, while Union Pay POS terminal concerns are overblown, say Morgan Stanley analysts.

“Macau underperforms the Hang Seng Index almost every year in Q2. This year it was accentuated by news of unavailability of Union Pay POS terminals as well as upcoming World Cup impact.”

Morgan Stanley said it expects GGR growth to remain at 10-15 percent in June and July, and should see a rally in the second half of the year.

“[This] should be supported by better valuation, normal seasonality of 2H being stronger, more hotel inventory added in mid-June, more junkets and VIP rooms added in September, and a stronger than expected economy,” it said.

Regarding the recent Union Pay concerns, Morgan Stanley said they view it as overblown.

“Historical efforts by central banks and monetary authorities (such as reducing the daily and annual ATM withdrawal limit, connecting ATM cards to IDs, and implementation of facial recognition) have had minimal impact on GGR, while making the industry structure much more robust and sustainable in the long term. We expect this to be similar.”

It also said that its exposure to premium mass should be minimal and for a short period only.

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