The Malaysian Reserve

Macau casinos sink on high rollers concern

Gaming chips are placed on a sic bo table at the Global Gaming Expo Asia (G2E Asia) in Macau, China, on Wednesday, May 16, 2018. The expo runs through May 17. Photographer: Anthony Kwan/Bloomberg

HONG KONG • Macau casinos shares tumbled yesterday on concerns that a softening Chinese economy is damping the allure of the baccarat tables for high rollers.

The Bloomberg Intelligence index for Macau casinos dropped as much as 5.2%, to the lowest level in a year, as Deutsche Bank AG became the latest firm to lower its forecast for revenue growth in the world’s biggest gaming hub. It cut its 2019 outlook by more than half, to 4% growth from 11% previously, citing concerns about the VIP segment and saying Macau is at the start of a downward earnings revision cycle.

Investors in Macau casinos are bracing for a pullback in spending by high rollers as China wrestles with an economic slowdown and faces uncertainties over the impact

of a trade war with the US. The move by Deutsche Bank follows a note by Sanford C Bernstein & Co analysts on Monday that showed Macau gaming revenue for the first nine days of September was below estimates. Bernstein in July also forecast 4% growth for gaming revenue next year, citing expectations for decelerating VIP gambling.

That pace would be far below the consensus for 14% revenue growth in 2018 and 8.8% in 2019, according to a Consensus Metrix survey of 10 analysts in late August.

Macau gaming revenue was US$33 billion (RM136.95 billion) in 2017, a gain of 19% from a year earlier. The Macau index of casino shares has fallen 37% since the end of May, and has dropped every day but one this month. — Bloomberg