Guangdong COVID-19 Border Protocols Problematic for Macau Concessionaires, Says Bank

By | June 7, 2021

A recent surge in coronavirus cases in Guangdong, the Chinese province closest to Macau, is prompting stricter border controls. It could be the latest issue to weigh on the casino center’s still slow rebound.

Macau Guangdong
A section of the Macau-Hong-China Bridge. The gaming center could be hurt by increasing COVID-19 cases in Guangdong. (Image: Bloomberg)

Since the start of this month, more than 100 new COVID-19 cases were registered in the province, with most appearing in the cities of Foshan and Guangzhou. In response, Macau authorities are now requiring that anyone entering the special administrative region (SAR) from Guangdong provide a negative coronavirus test that’s no more than two days old. The previous requirement was a seven-day old test.

Additionally, travelers that have been to Foshan and Guangzhou over the past two weeks that are looking to enter the gaming hub must quarantine at a Macau hotel for 14 days. Tighter protocols could weigh on the SAR’s still-tepid recovery.

Tighter immigration policy from/via Guangdong will undoubtedly weigh on demand, putting a break in the respectable sequential recovery over the past six months,” said Credit Suisse analysts DS Kim, Derek Choi, and Livy Lyu in a recent note to clients.

In the Macau recovery scenario, there’s no understating the importance of Guangdong, because its proximity to the casino hub has a material impact. The province accounts for approximately 45 percent of the annual visits to the SAR.

Challenging Times for Macau

Dating back to the months immediately following the onset of the coronavirus, analysts widely viewed Macau as the gaming market to most rapidly return to pre-pandemic form.

That hasn’t been the case, and executives from some of the SAR’s concessionaires are expressing disappointment at the sluggish pace of recovery there. However, they add that they’re supportive of Macau’s safety first strategy, and that they’re still bullish on the long-term outlook for gaming demand there. Still, with Guangdong and Hong Kong grappling with increased case counts, Macau’s near-term outlook is murky.

“It also goes without saying that the long-awaited Guangdong-Hong Kong-Macau travel bubble is unlikely to happen in the very near-term, at least not until Guangdong and Hong Kong report zero local cases for over two weeks,” according to the Credit Suisse analysts.

Not Good Timing

News of the tighter restrictions with Guangdong wouldn’t be well-timed under any circumstances. But it arrives just days after data indicates May gross gaming revenue (GGR) in the SAR increased, and daily arrivals to the casino mecca jumped, too.

Due to last year’s soft numbers, analysts aren’t measuring 2021 GGR figures against 2020, but rather against 2019.

Through the first five months of this year, Macau GGR wasn’t approaching the tallies seen two years ago. But things were heading in the right direction prior to news of the COVID-19 uptick in Guangdong. How that scenario affects the time line to recovery, which could stretch into 2023, remains to be seen.

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