Xi visit dampens Macau gambling, Jefferies analyst says

Anticipation of a presidential visit to Macau by Chinese leader Xi Jinping has put a damper on early December casino revenues in the enclave. That’s the take of Jefferies Equity Research analyst David Katz, in an investor note published December 9.

Katz assured his readers that casino winnings “should rise throughout the month driven by year-end holidays, in-line with historical performance.” He also saw cause for hope in a new multi-entry visa regime for Hong Kong residents, which he described as an incremental positive.

Average daily casino takings were $70.1 million for the first eight days of December. This represented an eight percent fall off from November in terms of mass-market play and as much as a 10 percent decline in high-roller wagering.

The Jefferies analyst advised readers that the “slowing down in revenue in Dec was expected, as traffic control would be implemented ahead of President Xi’s visit to Macau for the 25th anniversary of Macau’s reunion.” The cool-off will likely last a while, as Xi doesn’t arrive in Macau until December 20.

Although casino revenues had been predicted to finish 2024 strongly, the pre-Xi slowdown casts doubt on that forecast. Katz said that Macanese casinos would need to average $81 million per day following Xi’s visit in order to fulfill government projections of gross gambling revenue.

One bright spot was tourism from Hong Kong that followed implementation of a relaxed visa policy on December 1. During the ensuing week, visitation from Hong Kong to Macau was up nine percent from December 2023 and 17 percent from November of this year. Katz called this new dynamic “moderately bullish.”

Looking further ahead, Katz predicted loosened monetary policies from Beijing in the coming year, along with such further economic-stimulus measures as lower interest rates and public-sector investment.

“The policy changes come as the domestic political landscape shifts and potentially threatens growth targets for the Chinese economy,” Katz warned. “From Macau’s perspective, this is modestly positive given a strengthening consumer would drive growth in the region.”

Katz’s two favored companies in the Macau market remain Las Vegas Sands and Galaxy Entertainment. Not only are they the two largest operators in the enclave, but Katz favored them to gain even greater market share by 2027.