Nomura Instinet issued a short note on Wednesday evening arguing that historical patterns from the 2003 SARS outbreak and 2008 bird flu scare suggest that the arrival of the Wuhan coronavirus will stunt growth in the gaming industry, but probably not reverse it.
“How the US-listed Macau Gaming stocks perform from here will, in our view, be tied to containment efforts. The smaller the number of new cases, the less likely it is that investors will be concerned. The inverse also holds true. The impact of pandemics on stocks tends to be at its worst before the WHO issues travel warnings,” the note concluded.
It was observed that the 2003 SARS outbreak came before Macau GGR data began to be collected, but visitation to Macau decelerated significantly from the +12 percent year-on-year levels to only +3 percent. A similar impact was seen during the 2008 bird flu scare.
The analysts were quick to note, however, that “over a 6-12 month period, visitation was still positive.”
They added, “These are interesting historic perspectives, but the path and intensity of the virus in the near term is unknowable.”