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MACAU BUSINESS


but the government has yet to divulge details on the matter.


The University of Macau also forecasted the economy


would go down 0.9 per cent next year, with the unemployment rate at 1.9 per cent. “If favourable outcomes are coming from the China-US trade negotiation and Chinese economic growth stabilises, Macau’s economic growth is expected to be more optimistic,” the university said. “However, if the Sino-US trade negotiation breaks down and Chinese economic growth continues to deteriorate, Macao’s economic growth becomes more pessimistic.”


Public investment


Acknowledging the Macau economy is now undergoing a “technical recession,” legislator Joey Lao Chi Ngai emphasises that the underlying fundamentals remain sound. “Given the special economic structure of Macau, which is small and easily subject to volatility, the contraction of GDP in the fi rst three quarters was not particularly high,” Mr. Lao said, who is also president of the Macau Economic Association. “Despite the fact that some


Better outlook for gaming


Albeit the high possibilities of fi rst annual contraction in gaming revenue in three years, many analysts expect the industry could rebound when 2020 is approaching. Latest fi gures from the Macau Gaming Inspection and Coordination Bureau show the gross gaming revenue amounted to MOP246.74 billion in the fi rst 10 months of 2019, down by 1.8 per cent year-on-year. The revenue in the mass baccarat segment totalled MOP90.06 billion in the fi rst three quarters of 2019, surging by 20.9 per cent year-on-year, but still not enough to offset a steep decline in the VIP segment, offi cial fi gures show. The gaming revenue in VIP baccarat reached MOP102.91 billion in the January-September period, plunging 17.1 per cent from a year earlier. The headwinds in the casino this year were caused by the economy in China – which has


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slowed to the lowest growth in almost 30 years – and a depreciating yuan that have made the mainlanders less willing to spend over the backdrop of the lingering trade war between China and the United States. The Macau government, which holds a more


conservative stance in estimates, does not expect the market fundamentals will be signifi cantly improved. According to the 2020 budget plan unveiled in November, the government anticipates the direct tax from casinos will total MOP91 billion next year, remaining unchanged from the forecast for this year and meaning the gaming revenue will stay fl at in 2020.


The gaming analysts, however, are slightly more bullish. JP Morgan Securities (Asia Pacifi c) has stated recently, “there’s a good possibility that 2019 marks a cyclical bottom” for the gaming industry, owing to a lower comparison


for 2020 and improved market fundamentals. Another brokerage, Morgan Stanley, expects the gaming revenue will edge up 2 per cent in 2020, with a 13 per cent decline in the VIP segment but an 11 per cent increase in mass gaming. “We expect new infrastructure... will help drive mass revenue growth in 2020-21,” the Morgan Stanley analysts noted, referring to, for instance, the opening of the Light Rapid Transit railway by the end of this year. Brokerage Sanford C. Bernstein Ltd is also upbeat toward the mid-to-long term growth of the sector, highlighting a compound annual growth rate of 9 per cent in the 2019-2023 period. “Over the medium and long term, VIP segment growth should be driven by continued expansion of the high-net-worth individual population in China, along with increase in the penetration of gaming in mainland China,” it said in a recent report.


micro, small and medium-sized enterprises might have faced operational diffi culties, the overall economy of the city has so far been stable.” As the looming global economic uncertainties


continue to linger, the lawmaker believes the government has to step up the public investment to drive the growth. Latest government fi gures show the public construction investment surged over 131 per cent year-on-year in the third quarter, as a result of increased government investment and a lower base of comparison.


“The authorities should accelerate the planning and


development of the 85 square kilometres of water territories, as well as the development of coastal tourism facilities and projects,” said Mr. Lao, referring to the central government’s approval four year ago on the demarcation of the water territories of Macau for its economic diversifi cation and regional integration. “These could also enrich the city’s tourism offerings and enhance the tourism carrying capacity, resulting in the development of the city into a world centre of tourism and leisure,” he added.


26 JANUARY 2020


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