Does Macau uptick mean that Beijing’s over austerity?
Select language to see a machine translation of this article. The original language of the Article is English and the translation is provided for your convenience.

Does Macau uptick mean that Beijing’s over austerity?

Ask any luxury investor what they think of President Xi Jinping’s austerity drive, and you are likely to wish your kids weren’t present. In an effort to reduce the scale of corruption in the country, Xi embarked on a program that would outlaw the traditional practice of gift-giving – once common in the establishment of new business ties – and shun conspicuous consumption.

This program hardly stopped China’s consumption of luxury, but it did hold it back. Now, recent data from Macau – the VIP filled casinos of which can be seen loosely as a bellwether for the Chinese luxury sector – suggests the worst is over.

gldn wk gph

After a long lag time, both mass market and VIP consumption in Macau has started to rise. This is great news for casinos, but it could also signal a turnaround in luxury spending, given that VIPs are outpacing not-VIPs in spending increases. There is other evidence that suggests this is the case, too:

Last September saw sales of luxury cars hit a record high in China, and European luxury brands have noticed an uptick in China’s domestic spending. Hermes International SCA CEO said in February that there had been “a much higher appetite for our industry generally since the second half [of 2016].”

At casinos, revenue from games rose by 18.1% in March – the quickest since February 2014, when an all time high of $4.75 billion was hit thanks to Lunar New Year wagers. This is great news for casinos – and the investors that hold them – but it’s also a positive signal for the Chinese luxury sector generally.


Dominion holds Las Vegas Sands Corp. in its Global Trends Luxury Fund, as well as numerous companies exposed to the Chinese luxury market.

If you would you like to receive the Newsfeeds daily, please click here to sign up now!

Help us make this Newsfeed better by rating this article. 1 star = Poor and 5 stars = Excellent
0.0/5 rating (0 votes)

The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.