Credit Suisse recommends reducing allocation to Macau gaming stocks, as stock prices have risen.
Attendants conduct play with the visitors over a Black Jack gaming table during the Global Gaming Expo Asia in Macau.Revenue from high rollers in Macau has been declining, and it's a sign the sector may be impacted by China's slowing economy.
Overall tourist numbers have held up, but declining revenues signal a drop in gross gambling revenues.Declining activity among high rollers and weaker than expected gaming numbers in Macau are further evidence that the slowdown in China is having an impact on the gambling capital of the world. In a note dated March 7, VIP volume was estimated by Credit Suisse to be down nearly 10% year-over-year in the fourth quarter while volumes for non-VIP gamers rose just 1%. Tourist numbers to Macau have held up, but it appears that people are gambling less.
The bank says now is the time to reduce exposure to the Macau gaming sector. Its coverage group includes Sands China, Galaxy, MGM China and Wynn Macau. Other analysts have also cited risks to the space."Despite November revenue better than expected...our lower estimates are driven by weaker VIP and premium demand amid heightened risk to macroeconomic outlook in China,"
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