Macau gaming growth to slow down amid China's crackdown on money exchanges

Macau’s gaming sector EBITDA growth is expected to slow in June and July due to mainland China’s crackdown on money exchange activities, according to brokerage firm Morgan Stanley.

Analysts Praveen K. Choudhary, Gareth Leung, and Stephen W. Grambling reported that the second quarter is likely to see the first negative quarter-on-quarter growth in both industry mass gross gaming revenue (GGR) and corporate EBITDA since the post-COVID-19 reopening, Macau Business reported.

The forecast predicts a 2% decline in mass GGR quarter-on-quarter, reaching 113% of the 2019 level. Corporate EBITDA is projected to decrease by 7% quarter-on-quarter, reaching 80% of the pre-pandemic level.

For the full year 2024, the analysts noted that a 5% growth in EBITDA in the second half of the year is required to meet the full-year consensus. However, the money exchange crackdown is expected to contribute to the slowdown in June and July. Weaker macroeconomic conditions, consumption, and retail sales in China may continue to affect the Macau market in the third quarter.

In June, China’s Ministry of Public Security called for enhanced cooperation between security forces in Macau and the mainland to combat illegal money exchange operations. These "money changers," particularly around the city’s casinos, facilitate the movement of funds between the mainland and Macau.

The analysts also foresee a negative impact on fourth-quarter results due to the anticipated visit of China’s President Xi Jinping, who is expected to visit Macau to mark the 25th anniversary of its handover to China by the end of the year.