Macau gaming numbers highlight positive regional trend

We tend to cast an eye over the official Macau gaming numbers released monthly, not because they are the best indicator of the mainland Chinese economy but they are worthy enough to add to the mix of official data which is reported monthly. Macau’s numbers usually correlate well with the overall sentiment in the market and that flows through to risk appetite in Hong Kong, Shanghai and Sydney stock exchanges. Last month’s numbers are important because they show an ongoing improvement from a very low growth rate booked in July. The chart below highlights the trend improvement.

Source: Gaming inspection and coordination bureau of Macau

September’s +12.3% improvement was actually below market estimates when adjusting for distortions from the Chinese Golden Week Holiday. The headlines read disappointment, but when put into perspective, City Index doesn’t share that type of negative view. The number in isolation is a very strong rate of growth in gross gaming when compared to what was already a very good number last year. So far this year, gross gaming revenues are 14.9% higher despite the slowdown in the mainland economy.

Hong Kong listed Sands China owns The Venetian Macao, The Sands Macao and the Plaza Macao which features the Four Seasons Hotel Macao and the Plaza Casino – an impressive portfolio of gaming exposures. Its shares (1928.HK) have risen 17.5% over the past three months, 27% year to date and 85% over the past year in Hong Kong. The returns show that despite all the negative press around the Chinese slowdown, trading opportunities are apparent. Sands China’s returns compare with the Hang Seng index adding around 14% year to date but almost unchanged on a quarterly and monthly basis.