Macau GGR expected to halve in March amid mainland China's Covid-19 outbreak

Macau gaming revenue is expected to drop by almost half in March amid the worsened mainland China pandemic situation, investment bank Citi predicts. According to Citi, the impact would cause gross gaming revenue to drop to MOP 4.5 billion ($558.5 million) this month.

This figure would imply a 42% decrease when compared with total results from the previous month, Macau Business explains. The bank has lowered its gaming revenue estimates for March from a previous MOP 7 billion ($868.4 million) prediction.

The Citi report further claims gaming revenue in the past week of March reached about MOP114 million ($14.1 million), 38% less than the average daily gaming revenue in the first six days of the month. This has led the shares of Macau operators to drop an average of 10% in value in the Hong Kong market on Monday, according to information from Bloomberg.

Shares of all six casino licensees were down upon the close of trading, with Wynn Macau facing the harshest drop, at 13.2%. SJM Holdings followed with a 12.3% decline, while Sands China posted share price down by 11.6%.

Meanwhile, Melco International Development experienced an 11.5% decrease at the close of trading on Monday, while MGM China Holdings posted a share price drop of 10.4%. Galaxy Entertainment Group saw the smallest decline, of nearly 5%.

The new wave of infections in mainland China -the worst Covid-19 outbreak since the pandemic began- has led to a decrease in stock valuations not only in gaming but most major sectors, such as technology. Mainland authorities reported 3,602 new confirmed cases on Monday, up from 1,437 a day earlier.

The critical situation has led the Macau government to establish a 14-day quarantine mandate for people coming from mainland high-risk areas. These include a number of major cities in the Guangdong province, such as Guangzhou, Shenzhen, Dongguan and Zhongshan.

According to a memo on Monday from brokerage Sanford C. Bernstein Ltd, the increase in Covid-19 cases in mainland China could lead to “greater travel impediments” in the near term, resulting in a reduction in visitors to Macau and GGR for “the rest of March and into April.”

The daily gaming revenues in Macau between March 7 and 13 were the lowest since a January Covid-19 pandemic outbreak in Zhuhai, the brokerage further found. Average daily travel in and out of Macau for March 3 to March 9 was down 41% to 31,200 travelers.