Morgan Stanley’s AlphaWise survey revealed that more investors have exclusions on the gaming sector, from 29 percent in 2022 up from 24 percent in 2021.

Most of the exclusions are from long-only investors instead of hedge funds, the brokerage’s research of close to 320 investors globally revealed.

On the impacts of the valuation multiples for Macau gaming, Morgan Stanley believes valuation multiples for the group should still be largely driven by fundamentals: growth potential, earnings quality, and regulations. 

While trading volume has been consistently coming down, owing to delay in border opening, it also shows the positioning in the group to be low, the brokerage argues

Morgan Stanley expects investors to come back to these stocks in 2023 when there’s clarity on gaming licenses and COVID-related travel restrictions.

Gambling is the fourth most excluded sector among investors, ahead of military equipment and oil & gas.

Of the surveyed investors by Morgan Stanley, 29 percent exclude the gambling sector, an increase from 24 percent in 2021. The brokerage argues that the exclusions are applied mostly by European investors, of which 90  percent have exclusions on at least one sector, in contrast with APAC, with 72 percent, and the US with 40 percent.

The research found that exclusions are mostly from long-only investors instead of hedge funds.

In 2022, 34 percent of the surveyed long-only investors have exclusions on the gambling sector, compared with 26 percent in 2021, while only 13 percent of hedge funds have such exclusions, from 14 percent in 2021.