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Return of COVID to Impact Macau Casinos Q3, Say Analysts


According to Credit Suisse analysts, Macau casinos could face a difficult second half of Q3 with the government implementing new restrictions in response to COVID-19 cases. [Image: Shutterstock.com]

Worrying signs for Macau

Casinos in the Chinese gambling hub of Macau have seen some recovery from the COVID-19 pandemic in 2021 as a result of the easing of restrictions. However, new cases of the virus and fears of the fast-spreading delta variant have caused Macau officials to reintroduce measures.

the first community case of coronavirus in 18 months

On Wednesday this week, the Macau government said it would begin a mass testing process on its 600,000 residents after discovering the first community case of coronavirus in 18 months. The new rules will require all citizens to take a COVID-19 test within 72 hours at one of the autonomous region’s 41 testing points.

Although casinos will remain open for now, the Macau government has announced the closure of entertainment venues. This includes gyms, bars, massage parlors, and karaoke venues. Macau chief executive Ho Iat-Seng said the measures will end if there are no new cases in the next 14 days.

The new restrictions have prompted analysts from Credit Suisse, a global investment bank, to recalculate their predictions for the Macau casino market. The experts believe Q3 will now prove “weaker than expectation.”

Drastic measures implemented

Macau has reported no COVID-19 deaths and only 59 cases of the virus since the beginning of the pandemic. In part, this is due to the strict travel restrictions implemented on the region, which led to a drastic reduction in the number of visitors to the usually thriving gambling destination.

In its announcement Wednesday, the Macau government confirmed that a family of four has now tested positive for the virus. As a result, the health codes of all of the region’s residents have now turned blue, banning them from entry into public places. They must receive a negative virus test to attain a green code, allowing them to return to society.

Similarly, the government has introduced strict testing procedures for those travelling to or from the neighboring city of Zhuhai. Those hoping to travel must have evidence of a negative test result obtained within the past 12 hours. Zhuhai has also confirmed that it will implement mass testing for all residents.

While Macau gamblers can continue placing wagers for now, Ho Iat-Seng has confirmed that casinos will close if the local government finds any cases within the properties.

Analysts revisit estimates

Investment bank Credit Suisse published a Tuesday note in which analysts Kenneth Feng and Lok Kan Chan gave their predictions for the Macau casino market’s Q3. The experts said that new travel limits and mass-testing have caused casino demand to decline, with Chinese residents returning to the mainland in droves.

there is a risk that Macau would become a medium risk area”

“From our on-the-ground checks, the players are currently in a rush to perform the COVID-19 test in order to return home, as there is a risk that Macau would become a medium risk area,” the note read. The analysts said that this has caused mass traffic in Macau to decline 25% from July, a drop which they expect to reach -50% in the next one or two weeks.

Feng and Chan have forecasted that casinos will see earnings fall in the third quarter of 2021 because of the declining number of visitors.



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