Macau casino stocks gain in Monday trade after China removes Covid-19 induced entry restrictions

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Macau’s casino stocks are on the upswing after it lifted entry restrictions on Sunday, enabling testing-free travel between the Special Administrative Region (SAR) and China, Hong Kong, and Taiwan, and abolishing quarantine for all entrants. According to China’s official tourism ministry, the domestic travel market is anticipated to rebound to over 70% of pre-pandemic levels following the opening up of both China and Macau.

The Monday closing price of Wynn Macau’s casino stock, which rose 4.7 percent on the Sunday reopening, was HK$9.61. Meanwhile, the stocks of Sands China and Galaxy Entertainment also increased 4.2 percent and 3.7 percent respectively.

Melco, SJM and MGM also saw gains of 8.89 percent, 3.42 percent and 3.14 percent respectively, as reported by Asia Gaming Brief.

The increase coincides with JP Morgan reporting that gross gaming revenues (GGR) for the first eight days of the year, along with Sunday when the SAR opened, totaled $261 million, which is the largest weekly total since February 2022 and 30 percent higher than pre-pandemic levels in 2019. The period’s daily GGR rate of $32.3 million was twice as high as the average for the fourth quarter of previous year and the results for the entire year.

According to estimates, approximately 10 and 15 percent of the daily GGR results came from VIP play. The analysts predicts that Macau hotels will likely be completely booked over the Chinese New Year vacation, which begins on January 22. The analysts highlight that mass demand may exceed 50% of the CNY period in 2019 for the next holiday. Analysts estimate that mass GGR in the first week of the year was up to 50% higher than pre-COVID levels.

Prior to this adjustment, the firm had raised its 1Q23 earnings forecast for Macau, stating that a “complete recovery,” back to 2019 levels, might happen at some point in the second half of the year, far faster than the anticipated recovery in mid-2024.

The opening of Macau is encouraging for the city, which was negatively impacted by COVID limitations and lockdowns throughout the year, leading to its worst GGR in history for 2022, at just $5.26 billion, a 51.4 percent annual decline. Despite a 16% monthly improvement, December’s GGR was only $432.74 million, a 56.3 percent annual decline.