It’s a well-established fact that 2019 hasn’t lived up to expectations in Macau’s casino scene. Overall, gross gaming revenue (GGR) has been flat compared to last year, which is another way of saying the market has been extremely soft, and the extended picture is beginning to look bleak, as well. If there was hope that an end-of-year push could help stop the hemorrhaging in 2019, it doesn’t look like that is going to happen and November is on track to see the biggest dip of the year.

Analysts with Nomura Instinet released an update on Macau’s gaming activity yesterday, asserting that protests taking place in Hong Kong are definitely impacting the city’s casinos. The extent to which the protests affect GGR, however, isn’t precisely known.

Both Nomura and Sanford C. Bernstein acknowledge the protests as a factor, but believe that the overall stance of Chinese consumers, which is weaker than last year, is playing a bigger role. Other factors include currency exchanges and Sanford Bernstein analysts explain, “Aside from a softer China economy, several other factors continue to create headwinds to GGR. Continued weakness in China’s currency poses weakness to GGR growth. Historically, there has been some correlation between GGR and the renminbi/Hong Kong dollar and U.S. dollar foreign exchange rate.”

So far this year, August recorded the biggest year-on-year drop when the local gambling market saw GGR of $3.01 billion, a decline of 8.6%. Based on what has been seen so far for November, the GGR could be as low as $2.77 billion, which would be around 9% lower than a year ago.

Macau seems to be preparing for a continued slump and the city’s government recently stated that GGR for next year most likely won’t see any growth. Analysts are now revising their forecasts for 2020 and Morgan Stanley has chimed in. Its market analysts, Praveen Choudhary, Gareth Leung and Thomas Allen, put out an update last Friday in which they indicate next year’s GGR to grow only by 2%, a drop from the previous 3% growth that they had expected.

The analysts added, “GGR growth could remain negative in the first half of 2020 unless VIP recovers. Consensus earnings revisions remain negative…For fourth quarter 2019, we expect mass revenue to be up 11 percent, while VIP revenue continues to decline [in this case] by 27 percent year-on-year. For 2020, we estimate mass revenue to be up 11 percent, [with] VIP to be down 13 percent, with GGR up 2 percent (earlier 13 percent).”

Fortunately, Macau is already working on a plan to diversify itself and attract more travel markets to the city. It is putting together framework that would make Macau more family-friendly and a hot spot for business gatherings and this will ultimately help shore up the city’s coffers as gambling loosens its grip.

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