Macau gaming stocks rally on positive border, GGR news

As of 4pm local time, the stocks of all six gaming concessionaires had shown improvement, with Galaxy Entertainment Group up 9.16% since market open to HK$76.25, SJM Holdings up 7.9% to HK$11.20, Sands China up 7.53% to HK$38.55, Wynn Macau Ltd up 4.97% to HK$15.22, MGM up 4.89% to HK$13.74 and Melco Resorts & Entertainment up 2.25% on the Nasdaq to US$19.10.

Also showing increases were Paradise Entertainment, up 14.63% to HK$0.94, Suncity Group up 2.63% to HK$0.78 and Macau Legend Development up 21.57% to HK$1.24 – the latter likely also influenced by confirmation on Monday the company intends to take part in the re-tendering process for Macau gaming licenses in 2022.

The strong performance of gaming stocks is almost certainly tied to a positive news cycle to start the week, most notable being a downgrading by China of its last remaining high risk and medium risk COVID-19 areas to low-risk. Recent outbreaks of COVID-19 across parts of mainland China had resulted in “stay in place” directives during Chinese New Year which in turn negatively impacted Macau’s gross gaming revenues.

Investment bank JP Morgan said Tuesday that although the primary areas in question are not in themselves meaningful for Macau, “this probably signals that China is increasingly comfortable on easing travel restrictions after the Spring Festival and, hence, this is directionally positive. Similarly, we’d expect cross-provincial travel restrictions (or discouragement, to be more exact) to be gradually removed, which in turn should help improve sentiment/confidence on long-haul and cross-border travels.”

JP Morgan said stock price increases may also have been in response to Macau starting its roll-out of COVID-19 vaccines to the general public this week, and rising GGR since the end of the CNY Golden Week holiday.

As reported by IAG, Macau’s gaming revenues more than doubled in the past week with February revenues now seen to be outpacing January at around MOP$466 million (US$58 million) per day.