Gaming stocks weighed down by dim outlook

Macau gaming analysts are anticipating revenues will not likely recover for the entire month of March. This is placing a heavy weight on the listed stocks of Macau’s gaming concessionaires, which have also been pounded recently by concerns that the coronavirus is spreading rapidly outside of China. Sanford Bernstein and HSBC are both bearish on the short-term outlook. 

Sanford Bernstein analysts led by Vitaly Umansky put out a note saying that a lack of clarity over any potential improvement in Macau’s GGR outlook will likely cause gaming revenues to plunge another 80% in year-on-year terms through the month of March.  

As they said: “Forecasts for the near term (i.e. 1H 2020) are largely guesses at this time, with the biggest variables now being when travel restrictions from China will be lifted. A conservative look at the situation leads one to conclude that the economic impact on China, the impact on travel and the number of infections and fatalities will be dramatically worse than SARS (even with what looks to be a much lower mortality rate). 

HSBC Research, meanwhile, released a report that said gaming stocks are only slightly lower than they were before the outbreak, and yet the outlook for the industry is still uncertain. Analysts quoted by Macao Daily News pointed out that Macau needs to return to normal business, and this would depend on a number of factors: reopening time of the remaining 12 casinos and 29 hotels, response time of tourists, especially groups, reopening time of non-gaming entertainment facilities, and the time needed for the public to regain confidence that the epidemic has been contained.  

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