Macau casinos will avoid trade war’s impact

According to Sanford C. Bernstein, the US-China trade war won’t impact on Macau casinos with significant American ownership and their rights to operate them.

Macau.- The US-China trade war continues to trouble the gaming segment in Macau. However, Sanford C. Bernstein says it is unlikely that American operators of Macau casinos are in danger.

Brokerage analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu are optimistic on the trade war’s impact on US-operated Macau casinos.

“Whenever U.S.-China trade tension heightens, investors start questioning if the U.S. casino operators (Wynn Macau Ltd and Sands China Ltd, and, to a lesser extent, MGM China Holdings Ltd) would lose their Macau gaming concessions,” the report said.

“While we acknowledge the souring U.S.-China relationship heightens this risk, we view the scenario where one or more of the U.S. casino operators loses their gaming concession to be remote, unless the relationship sours significantly further into a Cold War environment.”

The “most likely scenario” is a renewal “for all six parties and the concessionaires bear additional requirements and economic cost.”

Licencing process

The future of Macanese gaming licences remained unclear until recent comments by chief executive Fernando Chui Sai On. The official confirmed a Macau licence tender process will be launched before the current ones expire in 2022.

The executive made the announcement during a Legislative Assembly but didn’t give any timeline for it. Macau casinos await for the confirmation.

The government had just renewed MGM China and SJM Holdings licences, extending them until 2022. Their previous permits were set to expire in 2020 but were prolonged to match the rest of the group.

According to Bernstein analysts, criteria for the concessions would likely include several commitments. That covers non-gaming offerings, improved labour rights or working conditions for the employees.