Bernstein analysts see as a strong possibility that the Macau casino shutdown will last longer than anticipated.
The gambling venues in this enclave are not working. The local government came to this decision a week ago to help in stopping the spread of the Coronavirus.
But now, the brokerage company sees a chance that the shutdown will continue. There are plenty of news bits and pieces that enforce this scenario.
Closing the casinos in Macau costs millions per day, Wynn Macau alone already loses USD2.5 million per day that their Macau casinos are closed.
Firstly, the sacking of government officials began in Hubei province. There, an inadequate response from the local politicians and managers seems more and more obvious.
Additionally, the government is accusing some of them of fumbling the allocation of emergency funds and materials. This is related to the period after the epidemic began and could end up as even more serious criminal charges for some of them. Expectedly, the same process has people worried.
The main concern is the precise extent of the contagion in China and its further growth. So far, infections and deaths have occurred mainly in mainland China. However, there is no guarantee that the virus will not impact places like Macau in a stronger manner.
Bernstein analysts pointed out that even before the shutdown, the Macau casino industry was not doing great. The slow 2019 turned into an equally slow 2020 when the Coronavirus began to spread.
Casino operators in Macau were already not optimistic about 2020, before the corona outbreak. A lot of factors influenced the Macau casino industry negatively last year. There was the crackdown on illegal smoking in Macau casinos and the crackdown and arrest of loansharks. The protest in neighbouring city Hong Kong put pressure on the visitors’ flow, and the Chinese VIP market has been in hot waters.
Right now, the shutdown should end on February 19. However, the recent government briefing did not include any date for either reopening or closure extension.
Because of this, Bernstein forecasts believe that the near-term future of the casino domain in Macau is all about the virus and its repercussions.
More loosely, there is little to no chance of the first half of 2020 to be anything remotely successful. Even if the virus is somehow stopped dead in its track and the casinos open, who will come to bet?
Right now, the impact on the Chinese economy is still unknown, but the Lunar New Year extension alone must have created a lot of damage. The same wound only gets deeper and deeper with each day.
Considering that the same outbreak could end up with a political background, the best-case scenario does not feel like a great casino opportunity. Instead, most believe that a chance of recovery could appear in the second part of the year. Even then, it would be 2021 which actually undoes a lot of the damage from Coronavirus.
Although the coronavirus is closing down Macau, Suncity is not planning to delay the pre-opening of its new casino in Vietnam. A spokesperson of Suncity claimed that the situation in Vietnam is very different than that in Macau.
- Coronavirus Pandemic is Forcing Osaka to Move its RFPs Deadline - March 31, 2020
- Week in Casino News: The Strain on Sports Betting and Operators looking for Extra Cash - March 29, 2020
- Housebound UK Citizens produce a Direct Benefit to Online Casinos - March 29, 2020
- Boyd Gaming is cutting down its Dividend payments because of the Coronavirus Pandemic - March 28, 2020
- West Virginia Racing Commission allows Greyhounds to Exercise, but not Race - March 28, 2020