China

China: Macau Casino Stocks Soar as COVID Restrictions Set to Ease

SEP 26 2022·Updated SEP 28 2022

Story

Image credit: Bloomberg [via The Wall Street Journal]

The Facts

On Monday, shares of casino companies operating in Macau soared after the tourism-dependent city said it would ease COVID restrictions for visitors from mainland China.
The Wall Street Journal
Macau's Chief Executive Ho Iat-seng said the city would start allowing group tours from the mainland, as well as establish easier e-visa rules beginning in November. Following the announcement, the city's six licensed casino company's saw an overall stock price surge of over 10%.
Taipei Times
Several US casino companies were among those that saw significant gains on Monday, with Sands China jumping over 13%, Wynn Macau climbing 7%, Galaxy Entertainment rising 10%, and SJM and MGM China each seeing an 8% spike.
Al Jazeera
Ho Iat-seng said that the city's borders will first open to the mainland province of Guangdong, followed by Shanghai, Zhejiang, Jiangsu, and Fujian, with hopes that the daily number of visitors will reach 40k compared to the 11k in August.
Manila Standard
The news came as a surprise to the former Portuguese colony, which relies on gambling for around 90% of its economy. Macau — under strict COVID border restrictions since early 2020 — had expected easing of the restrictions to begin in early 2023.
Finance
The move comes as US-based casino companies currently face licensing issues: Macau sets a six-license limit on its gambling industry and, though the US-based Sands, Wynn, and MGM have expected to renew their licenses, the Malaysian Genting Group has now thrown its hat into the bidding process.
The Wall Street Journal

Sources Split

LEFT

CENTER

RIGHT

ESTAB
CRIT

CENTER

PRO
ESTAB

The Spin

Narrative A

Though the easing of COVID restrictions is undoubtedly a hopeful sign, an increase in tourism won't mean much to American casinos if they can't renew their licenses. If China pursues a protectionist agenda and blocks US companies, it could be a sign of market decline for many US investors in the region.

Forbes

Narrative B

With JPMorgan and Citigroup now bullish on American casinos like Las Vegas Sands subsidiary Sands China, the only response to this news should be optimistic. While licensing agreements are, of course, unknown right now, the fact that China is re-opening its borders to Macau should be what investors are focused on.