Hype driving short-term rally, warns analysts

Analysts have warned against over-enthusiasm for Macau casinos, after short-term rallies were observed in the sector.

Morgan Stanley’s Praveen Choudhary said the short-term rallies seen in the sector over the past three days were “unsustainable, as fundamentals have not improved”.

Sands China saw its shares rise 6 percent after it reported its second quarter results, which led to an overall rally in casino stocks – sparking a buying frenzy.

Wynn Macau and Galaxy Entertainment Group gained 21 percent and 16 percent, respectively.

Market experts said investors are getting carried away.

“The one-month growth in Sands China’s mass-market revenue was taken by investors as an excuse to speculate on the stricken casino players,” said Victor Au, chief operating officer at Delta Asia Financial, quoted by SCMP.

“We should wait another two to three months to see whether the Macau gaming industry is fundamentally improving or not,” he advised.

Au also said the VIP business has yet to show signs of recovery.

“I don’t expect the Chinese government to relax its restrictions on Macau gaming industry to boost those VIP takings,” Au added.