MACAU BUSINESS
Mainland economy
Lam Kai Kong, a director of the Macau Association of Gaming and Entertainment Promoters, noted his most optimistic forecast is that the business volume of the junkets in March could resume to about 20-30 per cent of the times before the virus outbreak. “Albeit the reopening of casinos, the problem is the
been affected by the United States-China trade war in the past year, which has weakened the willingness of mainland high rollers to take gambling trips to Macau and splurge on the casino tables. However, it is to a less severe extent than the turmoil in the 2014-2016 period, weighed down by the anti-corruption campaign led by Chinese President Xi Jinping that has kept many mainland gamblers at bay. The VIP gross gaming revenue declined 18.6 per cent
year-on-year to MOP135.23 billion last year, the first decrease since 2016, the DICJ data said. The figure last year also represented a plunge of 43.3 per cent from the peak of the VIP segment in 2013 when the sector raked in MOP238.52 billion.
Another blow
The junket trade group president noted the epidemic outbreak “dealt another blow” to the woe-plagued sector, but there have not been any closures of junkets and staff lay-offs at the moment. “However, if this epidemic continues, it’s difficult to say what the future holds,” Mr. Kwok added. Another set of DICJ data shows the number of licensed individual or corporate junkets, or so-called ‘gaming promoters’ in the government terms, totalled 95 earlier this year before the virus outbreak, down by 5 per cent from 100 in early 2019. The latest fall also marked the seventh consecutive annual decline since 2013; when a total of 235 gaming promoters, which help casinos to entice big spenders and lend them credits for gambling that will be settled later, were recorded. Asked about the situation of the junkets, the gaming
regulator has lately responded that it has not received any reports of the closure of junkets amid the public health alert. Brokerage Credit Suisse said in a research report in late
February that the business volume of junkets after the reopening of the casinos – though the number of casino tables put into operation at the moment only represents less than 30 per cent of the existing capacity before COVID-19 – was only about 15 per cent of the normal business volume. The performance of casinos after the reopening has been
mostly supported by the VIP segment, as the business volume of the mass segment at the moment only translated to about 5 per cent of the normal time, the brokerage reasoned. The junket Credit Suisse have been cautious about the
prospect in the next few months the report said, predicting the gaming revenue will decline between 60 per cent and 80 per cent in March and April.
22 APRIL 2020
shortage of gamblers,” he said. “It’s still not clear when [Beijing] will start issuing new IVS permits again and it’s also not clear when the mainland gamblers will be interested to gamble in Macau again.” Bosses of mainland companies were the main patrons of the VIP clubs here, many of whom have been greatly affected by the epidemic with the temporary suspension of their business, he said. It might take a few months for their businesses to resume normal operation after the end of the virus outbreak, only when the gamblers might feel like visiting Macau again, he added. “The performance of the VIP segment has to depend on
how the mainland economy will evolve,” Mr. Lam said. The segment has already been pounded by the slowing mainland economic growth in the past year and more; posing more hurdles for the junkets to recoup the credits they have lent to the mainland high rollers, he illustrated. The mainland economy posted a growth of 6.1 per cent in
2019, the slowest expansion pace since the political turmoil in 1990. With the on-going efforts to contain the spread of COVID-19, analysts have gloomy forecasts for the world’s second largest economy. Brokerage Goldman Sachs estimated the mainland economy will expand 2.5 per cent in the first quarter; while its growth forecast for the entire year of 2020 has been lowered to 5.5 per cent from the original estimate of 5.9 percent. Another investment bank, Standard Chartered, tipped a growth of 2.8 per cent for the mainland in the January-March period. The International Monetary Fund (IMF) struck a slightly
more positive tone, believing the mainland economy could finish 2020 with a hike of 5.6 percent, albeit still 0.4 percentage points lower than its original forecast. “In our current baseline scenario, announced policies are implemented and China’s economy would return to normal in the second quarter. As a result, the impact on the world economy would be relatively minor and short-lived,” the IMF noted.
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