China Crisis Could Cause Macau Gambling Revenue to Stabilize in 2017

Economic issues for China’s President Xi Jinping could allow Macau to stabilize its gambling assets in 2017. (Image: chinadailymail.com)

Macau’s gambling industry might not be set for a major revival in 2017, but analysts believe the market has finally hit its lowest point.

In line with early predictions, Macau’s betting economy contracted by 3.3 percent in 2016.

That year-on-year decline to $28 billion revenue was the third consecutive drop of the region, but it could also signal an end to the tough times.

The Only Way is Up

According to analysts at Wells Fargo Securities, the market has potentially hit its bottom level and, thanks to some encouraging signs, things may start to improve throughout 2017.

“We continue to believe that while the market is stabilizing, we won’t see a v-shaped recovery like we did in 2010 and 2013,” Cameron McKnight of Wells Fargo Securities told Bloomberg.

Early signs of this stabilization have already been reflected in December 2016’s balance sheet. Reviewing the year-on-year activities in the weeks leading up to Christmas, Macau’s government recorded an 8 percent revenue increase to $2.48 billion.

Another potential positive for the market in 2017 is President Xi Jinping’s focus on other matters of importance. In the same way that online poker in the US might get a reprieve from RAWA thanks to Donald Trump’s mountain of more important issues, Jinping needs to stabilize China.

Bigger Issues Could Help Recovery

A stock market and currency crash in 2016 highlighted the fragility of China’s economy and with analysts suggesting current growth targets are “unrealistic,” there could be more problems ahead. These potential economic issues may overshadow any previous focus on Macau, its high stakes junkets and any potential corruption.

If this proves to be the case, Macau’s new casinos could enjoy a prosperous 2017. The Wynn Palace and Parisian Macao (by Sands China) may still struggle to turn a profit in a tough climate, but given the upswing at the close of 2016 and Jinping’s other interests, they may stand a better chance than they once did.

Of course, it’s not all positive vibes and looking forward. Back in December James Packer’s Crown Resorts sold almost half of its stake in Macau’s Melco Crown Entertainment.

With money still hard to come by and more pressing interests in Australia, Packer initiated a gradual withdrawal from Macau in a bid to focus more of Crown’s resources on its home-based businesses.

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