HONG KONG (Reuters) - Macau’s gambling revenue rose for a seventh month and hit a two-year high in February, in the strongest signal yet the casino hub was firmly on its path to recovery from a slump triggered by China’s anti-corruption campaign and slow economic growth.
Business has been bleak in the special administrative region belonging to China since Chinese President Xi Jinping rolled out a campaign against shows of wealth by public officials in 2014 - a move that effectively dried up the stream of VIP spenders from the mainland.
But the opening of new resorts in the world’s biggest casino hub over the past few months has helped revive revenue by attracting casual gamblers as well as high-rollers, prompting analysts to call a bottom to Macau’s gaming industry slump.
In February, Macau raked in a revenue of 23 billion patacas ($2.9 billion), up from 19.5 billion patacas a year ago and the highest since January 2015, government data showed on Wednesday.
Macau’s revenues indicate the gambling industry is showing consistent growth, with the last week of February particularly strong, said Richard Huang, analyst at Nomura in Hong Kong.
“While it is hard to call the last week’s results a trend, the industry has showed clear signs of stabilization.”
An analyst with Bernstein in Hong Kong, Vitaly Umansky, said junket marketing events over the last week of February had led to a significant increase in VIP spenders. He cautioned March could see “a slowing VIP environment” versus February.
Macau casino gaming operator shares gained after the revenue announcement. Galaxy Entertainment rose 4.3 percent, MGM China was up 2.9 percent, Sands China gained 3.4 percent, and Wynn Macau added 3.5 percent.
Earlier this week, Galaxy reported a better-than-expected 2016 net profit and forecast double-digit gaming growth for 2017. It also said that for the first time in a decade, overnight visitors to Macau this year had exceeded same-day visitor arrivals thanks to new hotel capacity.
Overnight Chinese visitation has grown after the opening of multi-billion dollar casino resorts in the third quarter of 2016 by Sands China and Wynn Macau.
Macau’s large junket operators have reported improving revenues since the second half of 2016. These firms, which act on behalf of casino operators like MGM to bring in high-rollers, had been slammed by the corruption crackdown but broad consolidation has helped strengthen their positions.
However, casino executives are betting more on the durability the mass market segment due to the steady growth of leisure visitors and the government’s aim to shift away from casinos toward more family friendly activities.
Macau is the only place in China where citizens are legally allowed to gamble.
The casino hub is set to see more new resorts - owned by the 13 Holdings and MGM - come online this year, followed by SJM Holdings’ casino in 2018. These come at a time when Macau is facing mounting competition from emerging Asian casino hubs, including Japan that legalized casinos in December.
Reporting by Farah Master; Editing by Himani Sarkar