While the US-China trade war truce will ease external pressures on China’s economy, there remains a considerable risk for trade tensions to escalate again next year given a wide gap in negotiating positions, says Fitch Ratings.
In recent months, analysts have blamed rising trade tensions between the two countries for the slowdown of the economy, which has led to lower than expected VIP gaming revenue across Asia.
The ratings agency made the comments in a note on Wednesday, in which it affirmed China at “A+”, outlook stable.
Fitch forecasts growth in China’s economy to decelerate to 6.1 percent in 2019 and 2020, down from 6.6 percent in 2018.
UBS lowers Macau 2019 estimates
On Thursday, analysts from UBS revised their Macau GGR expectations for 2019, down from a estimated growth of 5 percent to a decline of one percent in 2019.
The estimations are based on an 8 percent decline in VIP and 5 percent growth in mass.
“Despite November revenue better than expected, likely due to hold fluctuations, our lower estimates are driven by weaker VIP and premium demand amid heightened risk to macroeconomic outlook in China,” wrote the analysts.
The brokerage also noted that Macau will see more visitors in the next 12 months, but a weaker spend per customer.
“We saw notable increase in gaming budgets at lower end segments, while higher-end spend softening with an overall deteriorating financial outlook by gaming customers,” it wrote.