Macau’s casino market is expected to recover in the second half of the year as long as it can quickly contain the ongoing outbreak of the “Wuhan virus” and consumer confidence in neighboring China remains relatively high.
This is the opinion of Sanford C Bernstein Limited, a brokerage firm, following Tuesday’s decision to close all 41 casinos for 15 days to prevent further spread of the highly infectious coronavirus variant.
In early December, Wuhan, China, the “Wuhan virus” is officially known as the 2019 novel coronavirus (2019-nCoV), causing pneumonia-like symptoms such as severe fever and cough. The disease has so far reportedly killed more than 360 people in China, and Beijing officials have implemented a range of containment measures, including strict quarantine and travel restrictions.
The disease is known to have infected more than 31,700 people in China, with cases also recorded in faraway regions such as the United States, Australia, and the United Kingdom. The disease has reported up to one death in the Philippines and Hong Kong, with Macau reportedly dealing with 10 potentially life-threatening cases of the disease.
Earlier, Sanford C Bernstein Limited predicted that Macau’s total gaming revenue in the first quarter would fall by about 50% year-on-year to about $4.7 billion due to consumer unrest over the “Wuhan virus” and the subsequent temporary casino shutdown, but declared in a subsequent memo that the region’s gambling market could experience a “solid recovery in the second half” if the spread of transmission was “controlled.”
The brokerage reportedly warned that Macau’s huge neighbor may have to implement “strong government stimulus” but advised that “China’s economy is practically unshakeable and reduces customer confidence,” which will also help Macau’s casino returns in the second half of the year
International credit rating firm Fitch Ratings reportedly detailed Macau’s decision to temporarily close casinos using its own memo that it was certain it would have a “meaningful and immediate impact” on total gaming revenue in the first half of the year. However, Colin Mansfield, the company’s corporate finance director, advised that such damage is likely to be ‘transitory’ and not as severe as it appears due to a severe acute respiratory syndrome (SARS) outbreak in 2003.
“Unusual events such as health and geopolitical/terrorism are ongoing risks faced by gaming and tourism-related areas and their impact is generally temporary.”