Lady Luck Not Likely to Shine on Macau After Robust Golden Week

(Bloomberg) -- Macau’s robust Golden Week holiday performance isn’t likely to continue with concerns over China’s softening economy weighing down the gambling outlook in the world’s biggest gaming center.

Chinese arrivals in Macau for the first six days of October jumped 19 percent from a year earlier, according to Macau government data. Betting volume from high rollers was up more than 10 percent over the same period last year, wrote Morgan Stanley analysts led by Praveen Choudhary in a note.

Still, the casinos robust performance during the holiday isn’t removing analysts’ concerns that the industry will grow at a slower pace in the next few months amid a weakening macro economy in China. The firm expects Macau gaming to grow six percent in the fourth quarter, and lowered its forecasts for this year and in 2019.

Macau casinos are among the biggest decliners in Hong Kong Monday. Galaxy Entertainment Group Ltd. led the declines, with shares slumping as much as 5.8 percent while Wynn Macau Ltd. fell as much as 5.1 percent. The Bloomberg Intelligence gauge of Macau casino stocks has fallen more than 37 percent since reaching a May peak, outpacing the drop in the benchmark Hang Seng index.

Golden Week’s upbeat performance “may not continue for the remainder of the month,” Choudhary and the analysts wrote. “Macau in a slowing growth environment tends to underperform.”

Morgan Stanley lowered this year’s gaming revenue growth forecast to 13 percent from 16 percent and cut next year’s gaming receipts growth to 5 percent from 12 percent.

In contrast to Macau, Golden Week didn’t deliver a huge payoff for China. Consumption growth was softer than last year, and retail revenue growth may also underperform, according to a CICC note.

©2018 Bloomberg L.P.