Fortune smiles on Macau this November
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Fortune smiles on Macau this November

It’s good news for gaming mecca Macau, as recent figures show (much) better than expected revenue in November. Casino shares soared on the good news, and analysts rushed to comment on the news. These results, furthermore, are shored up by better macroeconomic news: as world leaders meet for the G20, it looks like the rocky relationship between Presidents Trump and Xi may be smoothing over.

Galaxy Entertainment Group’s share price jumped on the news

graph 05 galaxy

Source: Yahoo Finance

Macau’s Gaming Inspection & Coordination Bureau said that gross gaming revenue increased by 8.5% from November last year. That’s an impressive increase that more-than doubled the Street’s expectations (4% year on year growth). It also marks the regions 28th straight month of gains.

Morgan Stanley also praised geopolitical advances, as American and Chinese leaders got together at the G20. It said that the “constructive outcome from Presidents Trump and Xi’s G20 meeting” would push a recovery.  

David Katz, a Jefferies analyst, said: “The better-than-expected finish to the month is a positive development, particularly against challenging comparisons, which should result in a positive reaction from the shares.” Speaking to the wider issue of a trade war, he added that “the results of the G20 should allay Chinese macroeconomic concerns for the time being, and present a positive outcome for our related stocks...The decision to postpone the 25 percent tariffs is a positive for equity sentiment and will curb the pressure on the RMB devaluation.”

Steven Wieczynski from Stifel put it more bluntly: “The November GGR result marked the 28th consecutive positive monthly comp for the market. Bottom line is that the market continues to hold up better than the ‘fear’ that is associated with it.

Disclosure
Dominion holds Galaxy Entertainment Group in its Global Trends Luxury Fund.


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