New forecasts see Macau GGR growth flat in 2019
Fitch Ratings revealed it expects Macau GGR growth to be flat to low in 2019, despite mainland China’s economic deceleration.
Macau.- Forecasts for the gaming industry in the Chinese territory of Macau haven’t been very positive in the recent past. Most recently, Fitch Ratings revealed it expects Macau gaming gross revenue (GGR) growth to be flat to low in 2019.
The firm explained the industry will be negatively impacted by mainland China’s economic situation. As it decelerates, GGR will be impacted in the territory.
Growth still may be positive “due to the assertive fiscal stimuli by [the] mainland government, diffusion in trade tensions with [the] United States and the recently completed transportation infrastructure improvements.”
In a recent report, Fitch incorporated poor first quarter results. “We attribute the recent slowdown in Macau’s gaming revenues to negative economic sentiment on the mainland, exacerbated by trade tensions and credit extension slowdown,” they said. “The deceleration is largely tied to the economic slowdown on mainland China. It should disproportionately negatively impact the VIP segment.”
Other firms’ assessment
Bernstein has also lowered its forecast for Macau’s GGR in April. The firm assessed MTD ADR was down 12% after two weeks compared with March 2019, and down 14% year-on-year.
“ADR for the first half of the month was weaker than for March, as VIP hold rate is estimated to have normalised from the high hold rate last month. Mass and VIP volume is estimated to be down mid-single digits month-on-month,” Bernstein said.
That’s why GGR growth is now down from -12% to -9% year-on-year.
“We expect y/y comparison to be difficult through the end of April, as GGR was very robust in early 2018 until US-China trade tensions heightened beginning last summer,” analysts said.
