Macau COVID outbreak to see Golden Week lose its lustre: analysts

The bleak outlook, coming just days before what is traditionally among the busiest periods of the year for Macau’s casino and tourism sector, follows confirmation by authorities on Saturday that two security guards working at a quarantine hotel had tested positive to COVID-19.

In response, the SAR has entered a “state of immediate prevention” and launched a mass testing blitz of all residents, while Zhuhai has shortened the validity period of virus tests for those crossing the border to just 24 hours. Anyone entering Zhuhai from Macau between 6am on 26 September to midnight at the start of 29 September will also be required to enter 14 days of quarantine.

Gaming experts on Sunday reacted strongly to this latest setback with Credit Suisse analysts Kenneth Fong, Lok Kan Chan, Sardonna Fong stating that their on-the-ground checks have already indicated that “40-50% of players have cancelled their trip, on concerns that the situation could drag on longer than expected and they may need to be quarantined upon return to China. In fact, we have heard that several players have faced mandatory quarantine on return to China from Macau over the past few days.”

JP Morgan’s DS Kim, Amanda Cheng and Livy Lyu noted that the last time similar measures were put in place, when a family of four tested positive in early August, the result was Macau’s worst month of GGR since September 2020.

“The timing of these travel restrictions could hardly be worse, as the industry was preparing for solid pent-up demand for the upcoming Golden Week,” they wrote.
“While there’s still a possibility that travel restrictions could be lifted before or during Golden Week, we think it’s a foregone conclusion that it will be an un-golden holiday as many players are likely to cancel the trips to avoid risks of being quarantined upon their return to mainland.”

According to Credit Suisse, this latest development could also be an indication that worse news is on the way given that, unlike some regional jurisdictions, China and its SARs have shown little indication of moving away from a zero-tolerance policy towards COVID-19.

“With uncertainty over vaccines against the variant, China is unlikely to change course,” they said in a note. “That means, Macau’s current situation may well drag into 2022 or even 2023.”

JP Morgan described the Macau gaming sector as currently “un-investable” until more clarity is provided around plans to fully reopen and recently announced proposed changes to the city’s gaming laws.
Golden Week runs from 1 to 7 October 2021.

By Ben Blaschke