I wrote before a very positive story about Macau, this time a very negative story.
The two are perfectly complimentary to each other: short term a bad outlook (partly due to a significant slow down in the Chinese economy), long term a good outlook.
On a personal note, a friend of mine is living in Macau for quite a while and has never seen a blue sky for such a long period. In other words, the Chinese factories, who usually are responsible for the air pollution, are not running on full steam. There are many other similar indicators.
Investors worldwide should be cautious.
From Business Insider:
"Wall Street is turning its back on Macau after months of gaming stock sell offs and the lowest revenue of any summer since 2012.
But it's happening slowly and painfully — with analysts shaving off a percentage point here and there as bad news just gets worse.
That shouldn't be the case, Ray Young of Sterne Agee argued in a recent note in which he took his gross gaming revenue [GGR] estimate to 0%.
Most analysts are still sitting around at 3%.
"We believe our new estimates eliminate a trend representative of “Chinese Water Torture” - constant minor downward estimate revisions on the heels of mostly known GGR disruptive issues," Young wrote.
In other words, all Macau's devils are already here.
This weekend, horrid economic data out of China served as another all-around reminder of what Macau was (and would continue to be) lacking for some time — enough gamers to play the games.
High roller play has suffered the most, disrupted by a $1.3 billion heist that sucked cash out of the financing system Macau uses to fund VIP play.
Even more disruptive has been Chinese President Xi's corruption campaign. After going to Macau and checking things out, Young believes that the campaign isn't just impacting high roller play. Mass market players are feeling it too, and things are about to get even more strict.
"A new anti-money laundering (“AML”) framework may be adopted in Macau within the next 30 days," Young wrote in a note. "While the framework has a few new components, one Government contact believes the real risk for some will be a new “spirit of enforcement” which will come in tandem with the new framework, especially as it relates to know your customer (“KYC”) rules."
In other words, the government might start to care about who spends money in Macau and where they got their money from."