Inside Asian Gaming

have the same positive impact on Chinese outbound tourism. Furthermore, travel penetration in China remains very low, at similar levels to Japan in the 1980s. Thus, there is still ample potential for the mainland tourism market to grow. Macau, as a popular destination within the country, should see further growth as Chinese people continue to travel abroad. Macauhasbeenabeneficiaryofrenminbi internationalisation over the past six years. The line graph on page 16 show its gaming- revenue growth has been highly correlated to the year-on-year appreciation of the yuan. The relationship slightly derailed in 1H10 when the Chinese government attempted Average annual household disposable-income growth by decile, 1990-2010 Source: Euromonitor, CLSA Asia-Pacific Markets Source: Euromonitor, Datastream, CLSA Asia-Pacific Markets Macau’s main tourismmarket is driven by Chinese tourists To benefit from renminbi internationalisation Internationalisation of the renminbi, which is likely to result in appreciation of the currency, should also drive growth in consumption, outbound tourism and, therefore, Macau. Historically, the appreciation of the Japanese yen has resulted in significant increases in the country’s outbound tourism. Over 1970-2000, strong currency appreciation pushed resident departure as a portion of population up from less than 1% in 1970 to 14% in 2000. We expect the renminbi to appreciate 5.5% and 6.5% in 2011 and 2012. A stronger yuan is likely to CLSA Market Outlook