Banks, schools, government services and other businesses have been shut, but casinos remain open.

The testing of Macau's roughly 600,000 residents is expected to end tomorrow as the Chinese-ruled former Portuguese colony adheres to China's "zero COVID" policy aimed to eradicate all outbreaks.

Most residents have been asked to stay home, restaurants have been shut to dine-in customers, and border restrictions have been tightened, meaning casino revenue is likely to be close to zero for at least a week and likely the coming weeks, analysts say.

Shares in Macau casinos tumbled this morning, with Sands China leading the slide, falling more than 8 per cent — the biggest decline since March 15.

Shares in five other casinos dropped between 4 and 7 per cent.

Macau's government relies on casinos for over 80 per cent of its income, with most of the population employed directly or indirectly by the casino industry.

The latest outbreak came suddenly and had been spreading rapidly, with the source still unknown, Macau's chief executive Ho Iat Seng said in a statement on the government's website.

This is Macau's first major outbreak in eight months — its previous coronavirus outbreak was in October last year — and it has so far recorded no COVID-19 deaths during the pandemic.

An outbreak in the neighbouring Chinese territory of Hong Kong this year saw more than 1 million confirmed infections, and more than 9,000 deaths, swamping hospitals and public services.

While Hong Kong has seen an increase to over 1,000 daily cases in the past week, officials have said they are unlikely to further tighten restrictions as the pressure on medical services has not increased.

Macau only has one public hospital and its services are already stretched on a daily basis.

The territory's swift plan to test its entire population comes as it keeps open the border with mainland China, with many residents living and working in neighbouring Chinese city Zhuhai.

China, in contrast, has not opened its borders to Hong Kong, with the financial hub largely isolated from the mainland and the international world.

Macau's legislature is this week due to approve an amended gaming law which will lay the groundwork for what is required from the multi-billion-dollar casino operators so they can continue operating.

"Depending on how quickly Macau is able to get the newest outbreak under control, there is risk of delay to finalisation of the gaming law amendments and subsequent concession tender process," Vitaly Umansky, an analyst at Sanford C Bernstein, said.