Chinese stimulus cash 'may be boosting Macau'
Posted by Gavin Smith on 24 Jun 2009 at 09:06
Some of the cash poured into the Chinese economy by the authorities in an attempt to fight off the global downturn could be ending up in Macao's casinos, according to reports.
The Times says observers at the former Portuguese colony have noted a link between stimulation moves made by Beijing and how much cash is being bet.
Elsewhere, stimulus cash also seems to be turning up on the books of gaming firms in other countries.
The Times cites another example, Australia, where handouts provided by the government coincided with an increase in income for poker machines in the country, prompting concerned glances from gambling watchdogs.
Such has been the impact of stimulus money on Macau, gaming revenues have stabilised.
According to the Times, experts had predicted that some of China's $586 billion package would end up in casinos, but the effect has been clearer than some had predicted.
The positive impact on the casino industry in Macao could be felt again later this year if China relaxes visa restrictions on Chinese nationals looking to visit Macau. There has recently been speculation that could be an 'unofficial' relaxation of the rules.
Earlier this year in January Macau saw something of a bottom point in terms of customer gaming, but this is now starting to turn around in line with the growth in parts of mainland China.
The Times added the speed of loan growth has taken the Chinese authorities by surprise. Back at the beginning of 2009, Beijing laid down a target for banks to loan five trillion yuan (£445 billion) for the whole of 2009 as the credit crisis took hold.
But by April, new loans reached close to six trillion yuan, prompting fears from some experts that there could be a future bad loan problem bubbling in China.
The amount of cash is good news for Macau and could spark a turnround in the habits of VIP high roller customers whose pleasures account for about 80 per cent of gaming revenues in Macau. Aaron Fischer, an analyst at CLSA, was quoted by the Times as saying: “The important conclusion is that as we start to see confidence return to financial markets and the real economy, confidence will return and so will VIP play,”
Gabriel Chan, of Credit Suisse, said the credit boom will particularly help revenue-rich junkets operations which were hit during the crunch. The Times reports he said the growth of loans has upped the number of package tour visitors for Macau.
However, not everyone thinks that the immediate future is bright for Macau. Some of the region's biggest new casino projects have ground to a halt when had they been completed they could now be full of visitors from the mainland who are enjoying better fortunes.
Recently the City of Dreams, a huge new casino leisure complex, opened its doors for the first time to a fanfare. The aim is to help Macau become not just the place for hardened card sharks and roulette lovers, but for holiday makers worldwide. However, according to the Times, locals pointed out that the second week of business at the resort has been slow.
Other experts have said the national stimulus may not be having such a significant effect on Macau and have added the region's recovery is more dependent on how the economy in Guangdong Province gets on.
Quoted by the Times, Macquarie Securities analyst Gary Pinge said: "The key driver of any recovery for Macau is going to be an overall improvement in the economic situation in Guangdong Province,”
“At the moment we are seeing container volumes still down significantly, electricity usage down and other signs that factories are still not getting a stable flow of orders due to weak end-user demand in developed markets.”
