Macau: Casino Shares Optimism Dampened by New Covid Case

Macau’s casinos rallied Wednesday on the news that authorities are about to resume group tours from mainland China to the Special Administrative Region (SAR), only to subside later in the day on the rollout of mass testing in some areas, Bloomberg reported.

The City Ready to Resume Mainland China Tours

Following a report in TDM, shares of casino concessionaires jumped in early trading hours but did not manage to hold onto their gains after the city detected its first new coronavirus infection case in about two months.

TDM reported that four provinces and one city in mainland China are in advanced preparations to resume group tours to the SAR and were given guidelines by Macau’s health bureau about capacity limits and testing frequency.

Last month, Macau chief Executive Ho Iat Seng said that the city should resume group tours from mainland China as early as November, with Guangdong the first to resume organized travel, followed later on by Shanghai, Zhejiang, Jiangsu, and Fujian.

The report in the media did not go into details about the date on which the tours will resume but according to the Macau official at a Wednesday briefing, authorities completed most of the preparation work ahead of the resumption, including how people who may get stranded by an outbreak should be treated, and is now waiting for detailed information from mainland China.

The TDM report specified that each tour would feature a limited number of people and tour guides should be subjected to testing on a weekly basis at least, while staff and participants should declare a 10-day travel history. Further, people will have their temperature checked, should wear face masks most of the time, seating should be fixed and itineraries recorded.

The TDM report sparked optimism among investors during early morning trading and a Bloomberg Intelligence gauge on Macau casinos registered a 3.6% increase before news that a new infection case was detected took the wind out of the casino shares’ sails as the gauge ended the day just 0.3% up.

Mass Testing Rollout Spooked Investors

With a Covid Zero policy in place, only one new case of the infection poses a significant risk to the casino sector which is still struggling to recover from the early pandemic impact, and the effective Wednesday afternoon mass testing rollout announced by the city spooked investors who cut short on casino stocks.

At a short briefing, health officials informed that the patient who tested positive did not move around much in Macau and the risk of having transmitted the infection was low. The patient only frequented Macau and the neighboring city of Zhuhai on the mainland.