By Ben Blaschke
Macau casino stocks have surged to their highest levels since 2015, with Galaxy Entertainment Group the third best performing company on the Hong Kong Hang Seng Index over the past 12 months, according to Bloomberg.
Galaxy has soared by 60% with its shares trading at 26 times projected earnings and 42% above its five-year average. It comes on the back of the BI Macau/China Gaming Market Competitive Peers gauge – which tracks the performance of Macau’s concessionaires, rising 1.1% on Monday for a sixth day of gains.
It follows a more general trend of increased luxury spending on the back of improved capital flow out of China and increased liquidity. Expensive spirits and Swiss watch sales have also jumped considerably.
“Anti-corruption remains a concern to those stocks, but it’s no longer a top concern,” said Sun Hung Kai Financial strategist Kenny Wen.
Macau’s gross gaming revenue has now enjoyed eight consecutive months of year-on-year growth after more than two years of decline, with March enjoying a massive 18.1% boost on the back of impressive VIP volumes.
However, Daniel So from CMB International Securities Ltd has warned investors that Macau’s casino stocks may have recovered too fast.
“Casino stocks have almost fully priced in an industry recovery in 2017 so shares may end the year roughly unchanged,” he told Bloomberg.
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