COVID-19 was damaging to the global gaming community in more ways than one, but operators were somewhat given an opportunity to prepare. The roller coaster ride in performance was dragged out over more than a year, making it easier – but still unpleasant – for casino companies to adjust their activity. However, as bad as things were, nothing was as surprising as what happened last week, when Macau gaming stocks tanked 26% in less than a day. Fortunately, it now appears that there is some optimism, as the stocks have found a small recovery.
Macau’s Uncertain Gaming Future
Macau’s gaming operators could only watch as their stocks took a nosedive last week, the result of new proposed regulations that have some people more than a little uneasy. The city is promising to become more diligent with its casino and financial movement oversight and there is still some uncertainty regarding how, and how many, licenses will be promulgated when the current concessions expire next year.
When Macau’s Gaming Inspection and Coordination Bureau (DICJ, for its Portuguese acronym) submitted its draft rules for public scrutiny last week, the result wasn’t pleasant. Stocks dropped 26% in a single day as the market segment lost $18 billion. Although no one will openly admit it, the changes being implemented in Macau, including the implementation of a shorter licensing period moving forward, could be a result of China’s influence over the city. One scenario could see China directly asserting its control over the city’s activity and the other could see Macau proactively making changes it expects to appeal to the mainland in order to stave off a control grab.
Stocks Find a Foothold
The DICJ and the Office of the Secretary for Economy and Finance (OSEF) met with representatives from Macau’s gaming industry earlier this week to discuss some of what’s going on in the market. It acknowledged that the sub-concession plan currently in use is going away and that there is some latitude regarding a law that requires at least 10% of a company’s shares to be held by local residents. All six of Macau’s casino concessionaires were reportedly represented at the meeting, which is said to have been attended by 190 people in total.
Subsequent to that meeting, although with no real conclusive updates provided (the DICJ representatives reportedly stayed silent throughout the meeting – only the OSEF spoke), gaming stocks found some correction. They picked up 4.3% to close at $52.5 billion at the end of the day on Tuesday, but there is still more to be done for the market to return to the $70.6-billion level it was at prior to last week’s crash. Since Tuesday’s close, the stocks have continued to find additional support and are likely to stabilize by the end of the week.