In a surprising move, the People’s Bank of China (PBOC) recently unveiled a series of monetary stimulus measures aimed at bolstering the Chinese economy. This announcement is particularly significant for Macau’s gaming and tourism operators, as analysts believe these measures will provide medium-term support despite recent weakness in the gaming sector.
Overview of the Monetary Stimulus Measures
On Tuesday, PBOC Governor Pan Gongsheng outlined several key initiatives designed to stimulate economic activity. These measures include cutting short-term interest rates, reducing reserve requirements for banks, and lowering rates on existing mortgages. Furthermore, the PBOC is providing liquidity support to financial institutions and encouraging increased share buybacks by listed State-Owned Enterprises (SOEs).
These measures aim to lower borrowing costs, ensure financial stability, and enhance investor sentiment within the Chinese stock market.
Market Reactions to the Announcement
The immediate market reaction to these stimulus measures was notably positive. According to Seaport Research Partners analyst Vitaly Umansky, both the CSI 300 and the Hong Kong Hang Seng Index (HSI) experienced significant increases. The CSI 300 rose by 4.3%, while the HSI climbed by 4.1%. In addition, Macau stocks in Hong Kong saw gains ranging from 2.4% to over 6.6%.
This robust market reaction indicates a shift in sentiment towards both China and Macau, particularly in light of the previously low expectations for any meaningful stimulus in the short term.
Adjustments to GGR Estimates for September
Despite the positive market sentiment, Seaport Research has adjusted its gross gaming revenue (GGR) estimates for September downward, primarily due to recent visitation declines attributed to typhoons impacting the region. The previous estimate of MOP $17.75 billion (approximately US$2.32 billion) has been revised to MOP $16.75 billion (approximately US$2.09 billion). This adjustment brings the expected GGR for September in line with historical trends and represents a 12% year-on-year increase.
Looking Ahead to October
Analysts remain optimistic about the upcoming month, anticipating a substantial boost in GGR due to the Golden Week holiday. The forecast for October stands at MOP $21.5 billion (approximately US$2.68 billion), reflecting a 10.3% year-on-year increase and a 28% month-on-month increase.
Expectations for November and December
While the outlook for October appears promising, Umansky expressed confidence that GGR figures for November and December would follow typical historical patterns. However, he noted that December might see a slight dip due to the anticipated visit of General Secretary Xi Jinping for one day, which could affect overall tourism.
While the recent monetary stimulus measures by the PBOC are expected to have a medium-term supportive impact on Macau’s gaming and tourism operators, analysts are cautious about short-term fluctuations in GGR due to external factors such as typhoons. Nevertheless, the anticipation surrounding the Golden Week holiday offers hope for significant revenue increases, with projections indicating a positive outlook for the remainder of the year.