Macau’s gaming law reforms positive for casino industry, but outlook clouded by Covid-19 uncertainty, UBS, JPMorgan analysts say
The amendments to Macau’s gaming laws have removed significant regulatory overhang for the city’s casino industry, but the outlook for the sector remains clouded because of the uncertainty over Covid-19, analysts said.
Macau’s casino stocks jumped in Hong Kong on Monday as investors cheered the biggest reform in gambling laws in the world’s largest betting hub.
Hang Seng Index constituents Sands China soared 14.6 per cent and Galaxy Entertainment jumped 7 per cent, pacing a rally in gambling concessionaires. MGM China gained 11.7 per cent, while Melco International and SJM Holdings rose at least 4.8 per cent. Wynn Macau added 11.9 per cent. The six casino operators added HK$42.2 billion (US$5.41 billion) to their market value.
“A lot of the terms and the changes are quite benign. Overall, this [provides] clarity and removes a big overhang for the sector,” said UBS analyst Angus Chan in an interview on Monday. “Investors have been concerned about policy risk, so [the amendments should] show that the Macau government is very pragmatic and sensible about Macau.”
While the Swiss bank remained positive on the sector through 2022, the coronavirus situation remained “the elephant in the room,” he added.
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