Macau: Is now the time to invest?

August 10, 2022 Macau Emerging Markets

Following the Macau casino industry’s worst month since the Covid-19 pandemic began, the team at Gambling Insider debates whether now is actually a good time to invest in the gambling hub.

With stocks potentially low and an eventual uptick potentially sizeable, should investors consider the region more than ever right now – or are Macau’s struggles set to do it longer-term harm?

Yes: A market primed to roar again

In 2019, Macau was unsurpassable. Gaming revenue from the region’s casinos exceeded US$29bn for the full year. By comparison, its biggest competitor worldwide, Las Vegas, recorded US$6.6bn in revenue (with wider Nevada generating over US$12bn). The difference was stark.

Macau’s roaring success, becoming the world’s most lucrative gaming region, showed no signs of slowing down. That is until the Covid-19 pandemic struck in early 2020. As with most industries, Macau’s revenue plummeted, dropping 79% for the full-year 2020 to US$7.57bn. Travel restrictions and lockdowns peppered the region’s 2020 calendar, but it was the same everywhere – for the most part.

It would be a stretch to say that 2020 specifically would have been the best time to invest in Macau’s gaming industry – markets were down globally, in nearly all industries. But from mid-2021 onwards, there was a clear divergence in performance between Vegas and Macau. The roll-out of the world’s first Covid-19 vaccine represented the beginning of the end, in Western markets at least, and Las Vegas saw a significant change in fortunes. The Strip saw a 40% revenue increase year-on-year, taking a record US$7bn amount. However, Macau’s yearly revenue only reached US$10.82bn, and although still higher than Vegas, revenue majorly underperformed on the US$29bn reached in 2019.

China’s zero-Covid policy, adopted in Macau, was seriously hindering the region’s performance. Analysts from all over began to wonder just when China’s special administrative region would recover, amid intermittent lockdowns and blanket travel restrictions. And, as 2021 drew to a close and 2022 began, markets were indicating that 2022 could be the start of Macau’s comeback.