S&P joins chorus predicting 2015 Macau weakness

Standard & Poor’s has joined rival rating agency Fitch and other analysts in predicting “some loss of momentum” in the Macau market in 2015, largely due to a decline in VIP gaming revenues, and gains in mass-market gaming.
In a research report, S&P said the slower trend also reflected slower economic growth as well as the impact of the anti-corruption campaign in China.
Analysts expect that the middle-class population and disposable income in the region will increase steadily, which would support overall gaming industry revenue growth across the region.
A strengthening in cash flow from existing properties will underpin the credit quality of gaming operators in Asia-Pacific. S&P says this improvement will temper risks associated with investments in new gaming capacity and any moderation in demand.
The impact of China’s anti corruption campaign is set to continue to have a ripple effect on VIP gaming as well as the shift towards the mass market, especially in Macau. But the analysts also see heightening competition from increasing gaming capacity; and rising cost pressures in Macau.