Industry analysts remain baffled by the declining trajectory of Macau’s gaming stocks, which have plummeted to their lowest levels of the year in December – despite revenues and profits surging back towards pre-COVID levels since Macau reopened its borders to the world on 8 January.
In a surprising twist to the SAR’s recovery story, the stock prices of five of Macau’s six concessionaires are even trending more than 20% down compared to 1 January 2023 – a full week before the border reopening.
Only MGM China, which is already outperforming 2019 levels thanks to the addition of 198 new gaming tables under its 10-year gaming concession signed last December, has seen any improvement as of 4 December 2023, with shares up 1% over their 1 January trading price.
An analysis by industry consultancy firm 2NT8 Ltd shows that the Hong Kong-listed stocks of the six concessionaires have been steadily declining since August but have reached their lowest point this month.
This, says 2NT8 Ltd’s Managing Director Alidad Tash, has been in “contrast to the actual performance of the casinos, since revenues and profits have been steadily rising.”
As of 4 December, Galaxy Entertainment Group was down 21% versus 1 January and Sands China down 22%. It gets worse from there, with Wynn Macau down 32%, Melco International Development – the parent company of Melco Resorts – down 38% and SJM Holdings down 48%.
While there is no obvious reason why this should be the case, Tash said, “The culprit is most likely the fear of a slowdown in China, especially as it relates to non-essential spending such as luxury items, gaming and leisure.”
JP Morgan analysts recently expressed similar surprise at the performance of Macau stocks, pointing out in a research note than the combined market cap of the six concessionaires had fallen back to the same level it was a year ago and still only half of pre-COVID levels.
