Insight MACAU
Communist Party Secretary of Guangzhou. The province is thought to be the main source market for most of Macau’s high rollers.
He also puts forward the view that the crackdown has moved to corruption in lower level tiers of government and thus may be slowing the approval process for businesses needing government permits. This may be affecting some players’ businesses directly, he said.
Another factor hurting sentiment is a planned visit by China's President Xi Jinping to Macau in December. "We think gamblers and junkets may want to lie low until they get more details (or lack thereof) from those events and regain confidence," Kim said.
Cheung, who says Nomura is perhaps more conservative than others when it comes to the VIP sector, also said some junkets are looking to diversify into markets outside of Macau which may hurt revenue.
That trend is likely to accelerate as other casinos
While the crackdown has caused “a lot of fear” in the market, revenue has fallen off so sharply only over the past few months, when the crackdown isn’t new. The anti-corruption drive has focused more directly on Guangdong province, with the announcement in June of an official investigation on Wan Qingliang, the then Communist Party Secretary of Guangzhou. The province is thought to be the main source market for most of Macau’s high rollers. In fact the crackdown has moved to corruption in lower level tiers of government and thus may be slowing the approval process for businesses needing government permits. This may be affecting some players’ businesses directly.
Article first appeared in Asia Gambling Brief
open around Asia, with operators seeking to lure junket business to their new properties. UBS estimates VIP competition from other countries could take 34 percent of junket volume in 2015.
Other challenges to the market include table caps in Macau prompting casino operators to switch tables from VIP to the mass market due to higher returns from premium mass tables.
CLSA’s Fischer says the mass market is still holding up despite slowing, but sees considerable potential for recovery once more hotel rooms come onto the market.
"We have a very, very bullish view on the impact of new properties. We think that new supply will accelerate the growth in the market because there's a shortage of hotel rooms in Macau for the moment," he said.
While the opening of new properties has generally been seen as mainly beneficial to expanding the mass market, JPMorgan’s Kim also sees potential for a boost to VIPs.
"For VIP, the new opening (of new casinos) would give junkets a good excuse to approach and convince their clients, while players themselves would certainly want to try out new products too," he said.
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