Casino owners in Macau are bracing themselves for a potential downturn in VIP high-stakes business following news that Chinese Premier Li Keqiang may be about to pay an official visit to the former Portuguese colony.
According to a report from the Bloomberg news service, the visit of Chinese President Xi Jinping in December of 2014 heralded a heightened drive by the government against corruption that scared away many high-stakes players while the city’s gambling industry was officially advised to diversify its business away from VIP players.
Bloomberg reported that 61-year-old Li is expected to attend a two-day conference of ministers from China and Portuguese-speaking nations that is set to take place from October 10 although no official confirmation has been received as the schedules of the country’s top leaders are considered secret. It explained that Macau’s gross gaming revenues could be affected by the visit as last month saw this main indicator of the market’s overall health reverse a 26-month slump to rise by 1.1% year-on-year. The figure for September is predicted to have increased by up to 4% due in part to the opening of the new Parisian Macao Casino Resort from Las Vegas Sands Corporation while the week-long Golden Week holiday to celebrate China’s National Day starts from October 1.
“Things might quiet down during mid-October because of the expected visit to Macau of China’s Premier Li Keqiang,” Grant Govertsen, a Macau-based analyst at Union Gaming, told Bloomberg. “Historically, visits to Macau by high-level [Chinese government] officials have had short-term negative impacts on gross gaming revenues and we expect this same dynamic to occur in October.”
Bloomberg reported that Govertsen’s opinion is being at least partially shared by analyst Charlene Liu from HSBC Holdings as she wrote in a September 27 note that the potential visit “is unlikely to bode well for VIP revenues” while Credit Suisse’s Kenneth Fong explained in an earlier update that Li’s possible presence “raises concerns about traffic control around the trip”.
However, some speculate that Li may arrive bearing supportive policies with Fong writing that the recent easing of policies surrounding business visas for conventions “signal that the central government is more supportive to Macau, especially on the development of non-gaming activities”.