China’s recent monetary stimulus is expected to benefit the world’s largest gaming hub, Macau, as the nation’s economy gains momentum and consumer and business confidence improves, notes Seaport Research Partners.
This renewed optimism may further support Macau’s growth narrative as it moves into 2025, particularly with a potential recovery in the mass market segment.
Senior Analyst Vitaly Umansky mentions in a recent investment memo that, a week ago, the Chinese government announced a series of monetary policy measures likely to bolster sentiment in both China and Macau. In an ‘unusual move’, the People’s Bank of China (PBOC) revealed a range of actions, including a reduction in the banking system’s reserve ratio, a cut in the benchmark rate, and adjustments to existing mortgage rates.
Additional liquidity measures for brokers and insurance companies, along with increased share buybacks for listed state-owned enterprises, aim to stimulate the Chinese stock market. The PBOC has indicated that more easing is forthcoming, suggesting that ‘we expect further stimulative measures in the coming weeks/months,’ and anticipates a pick-up in economic activity and confidence that could support Macau’s growth story into 2025.
Base mass recovery remains subdued
Despite these positive developments, the recovery of the base mass segment in Macau remains subdued, indicates Umansky.
Year-to-date through September, total gross gaming revenue (GGR) stands at 76.9 percent of the same period in 2019. While the mass market segment has performed well at approximately 112 percent of 2019 levels, the base mass recovery is lagging behind, estimated at only around 80 percent of pre-pandemic figures. In contrast, the premium mass segment has thrived, showing over 40 percent growth compared to 2019.
With junkets largely absent from the scene, year-to-date VIP gaming is running at about 24 percent of the same period in 2019, primarily through direct VIP channels.
Despite these challenges, gaming spend per customer remains robust, even amid soft consumer confidence and declining retail sales. The premium mass customer base continues to exhibit resilience, maintaining strong spending on the Macau experience.
October GGR to increase 25% MoM
The expectations for GGR during October Golden Week in Macau are optimistic. Seaport anticipates a daily GGR of MOP950 million ($118.5 million), representing a 4 percent increase compared to the May Golden Week and a substantial 25 percent rise over the Chinese New Year.
September’s GGR was reported at MOP17.25 billion ($2.15 billion), reflecting a year-on-year increase of 15.5 percent, despite a typical seasonal decline of 12.7 percent month-on-month.
The month’s GGR reached 78.1 percent of September 2019 levels, with year-to-date figures now at 76.9 percent of the same period in 2019. While the month began strongly, GGR softened more than anticipated as it progressed, influenced by typhoons that affected Guangdong, Macau, and Hong Kong, as well as another severe typhoon impacting the Shanghai area, an important feeder market.
Although GGR estimates were adjusted downward throughout September, the final week leading into Golden Week surpassed these revised expectations. The month concluded with results that exceeded analyst forecasts, with the average daily GGR of MOP757 million ($71.6 million) marking the weakest performance of the year.
Notably, September this year had fewer weekend days compared to the previous year, which generally correlates with lower GGR, as weekends typically generate over 20 percent higher revenue than midweek days.
Looking ahead, the outlook for Golden Week is promising. Seaport forecasts October GGR to reach MOP21.5 billion ($2.68 billion), reflecting a 10.3 percent year-on-year increase and a 24.6 percent month-on-month rise. This estimate is bolstered by strong hotel bookings and positive discussions in Macau, in line with historical trends.
Seaport notes that November and December are expected to follow typical seasonal patterns, although December may see a slight dip due to the anticipated visit of China’s president Xi in Macau, which could lead to a weaker week during that period.
Consequently, the 4Q GGR forecast stands at MOP 59.9 billion ($7.45 billion), indicating a year-on-year increase of 10.6 percent and a quarter-on-quarter rise of 7.6 percent.
