Gaming in Asia appears strong, despite a looming trade war between the United States and China. Nevertheless, global ratings agency Fitch is convinced that the sector will continue to grow in 2019, providing companies with opportunities to expand and develop.
The Future of Asian Gaming According to Fitch
The news that the United States and China will freeze their trade war for 90 days has been well-received by markets, with the US dollar inching up a bit yet another week. It’s in this context that credit ratings agency Fitch predicts that the Asian gaming sector will continue to expand rapidly, maintain its growth pace and also becoming resilient to global repercussions as the mass market sector becomes ever stronger.
Fitch cited one of the reasons for the positive long-term outlook as the “underpenetrated Chinese middle-class”. The company expects more Chinese gamers to seek ways to start participating in the industry, whether by travelling to regional hubs that offer gambling solutions and activities or by looking for alternative solutions closer to home.
Meanwhile, GGR growth will also be consolidated by the upcoming launch of SJM Grand Lisboa Palace. At the same time, MGM Cotai and Morpheus tower in City of Dreams will be expanding operations, having arrived earlier this year.
While the opening of the Hong Kong-Zhuhai-Macau Bridge occasioned the arrival of Chinese President Xi Jinping, sending scares across markets, Fitch estimates that the infrastructure project will in fact bolster results and allow the free flow of potential customers.
Fitch has noted that the VIP segment, as strong as it may appear, will most likely begin to slow down whereas the mass market will again surge and in fact spur any positive financial results.
We expect this trend to continue into 2019 as VIP is more sensitive to the economic and credit conditions on mainland China. We expect Chinese-related VIP weakness to spill over into other markets including Singapore and Las Vegas Strip. – Fitch
Speaking of the VIP segment, Fitch cited Singapore as an example of a country that is at a risk of having its VIP operations tanked by strengthening counterparts in China. The gross gaming revenue is expected to fall further in 2019, after having tanked 14% in 2017.
There has been talks for Southeast Asian expansion, particularly in the Philippines, although the Philippines President Rodrigo Duterte has been coloring around the lines in a bid to clamp down on gambling activities as part of his populist mantra.
The growing popularity of Asia as a market is visible across the board. Sports betting is no small part of that, too. By one estimate, China will be the most grossing market for sports wagers by 2030, followed by the United States.
However, while the United States has reached a relative state of gambling maturity Asia is still yet to expand its offer as people get richer and living conditions improve. A number of important infrastructure projects will arrive in the years to come, including the Integrated Resort (IR) planned in Japan.