Macau, the biggest gaming market in the world, has recorded its slowest growth rate of 1.5 percent this July. The slow growth is believed to be because of the global economic recession of 2009, which prevented people from visiting Macau and reduced demand from Chinese gamblers.
However, Macau’s July revenue of US$ 3.8 billion beat analysts’ expectations since it was definitely more than its June revenue. Analysts had predicted that the July growth will be either flat or down by 1 percent year on year.
Macau’s gambling industry, which was once thriving, has been crumbling of late because rich gamblers are feeling the pinch of credit difficulties and a slow Chinese economy. Macau, which is located close to Hong Kong, is the only Chinese location where playing casino games is completely legal.
During the third week of July, a ferocious tropical storm called Typhoon Vicente hit Macau and Hong Kong for the first time in 10 years. Since transport and ferry services came to a stand still for nearly one working day, Macau’s gambling industry suffered a loss of nearly 700 million patacas. Gamblers could hardly visit Macau during these days as most of China, including Beijing witnessed flash floods and heavy rainfall.
Last year, Macau was known as one of the fastest-growing economies in the world, reporting revenue of as much as US$ 3.5 billion, which is five times more than the gambling revenue of Las Vegas. Today, it appears dull with shares of popular Hong Kong casino companies down by nearly 20 – 30 percent. Analysts had predicted that revenue growth this year will be down by 20 percent, but recent analyses state that the growth will be below 10 percent.
Fitch Ratings had revised its growth predictions for Macau from 15 percent to 10 – 12 percent, “reflecting our more cautious view with respect to the near-term impact of the slowdown in China. This is our second downward revision over the last couple of months.”
According to Grant Govertsen, analyst for Union Gaming in Macau, the market will register a low single-digit growth this August and will then revert to double-digit growth the following month. He said, “We are expecting third quarter gross gaming revenue growth in the mid-single digits. Looking further out, we expect full year 2012 GGR growth to reach the teens.”
Besides, Sheldon Adelson stated in a conference call held recently that one quarter of poor earnings need not indicate any trend.