Macau’s gaming stocks may see a mid-year rally, said Deutsche Bank’s Asian gaming analyst, Karen Tang in a note over the weekend.
“Since peaking in late March, Macau stock prices have fallen 17 per cent as the sector entered a slow season in the second quarter of 2016 with gross gaming revenue down 8 per cent quarter on quarter,” said Tang. “In both of the last two years, Macau stocks had short-term summer rallies in July-August as GGR picked up over the summer holiday,” she added.
“With the Euro cup ending and (northern) summer holidays beginning, we forecast a summer pick-up where gross gaming revenue year-on-year growth may finally turn positive by August/September,” said Tang.
Macau gross gaming revenue fell 8.5 percent in June to MOP 15.9 billion (US$2 billion), according to figures from the Gaming Inspection and Coordination Bureau (DICJ).
The figures represent a 25th straight month of decline for the casino hub, in line with analysts’ expectations of -5 to -12 percent.
However, the DB analyst said we should not confuse the summer rally as a sign of cyclical recovery.
“We are not touting the summer pick-up as a sign of cyclical recovery. But as seasonality is more prominent this year, we think a strong summer can already give a boost to investor sentiments.”
A note from the DICJ last Friday also had a similar tone, with the gaming regulator estimating the adjustment period of gaming industry will continue into the second half of 2016.