(Feb 4): Casinos in Macau, the Chinese territory that’s the world’s biggest gambling hub, are being asked to temporarily close as China tries to contain the spread of the deadly coronavirus.
The move to suspend casino operations is the latest blow to the gambling mecca, which has been struggling to recover from the worst annual revenue decline since 2015. It’ll be only the second time such an extreme measure was taken; in 2018, a typhoon caused a 33-hour shutdown of casinos. So far, Macau has confirmed at least 10 cases of the novel virus strain that originated from Wuhan city in central China.
The Bloomberg Intelligence index of Macau operators fell as much as 3.7% Tuesday on the news, with stocks of all six companies in the gauge declining. MGM China Holdings and Galaxy Entertainment Group were the worst performers, slipping by 4%.
Macau will discuss suspension measures with the casino sector Tuesday afternoon, Macau Chief Executive Ho Iat-seng said at a briefing. He added that the city would be able to afford the economic cost.
The move will be a major blow for the gambling enclave that reported the fourth straight month of revenue fall as China imposed travel curbs. It’s coming after a dismal year weighed down by the trade war, Hong Kong protests and slowing Chinese economy.
The likely closing of casinos comes as the entire region has been nearly shut off to travel, depriving the gambling centre access to its biggest customers. Nearby Hong Kong has restricted transportation from the mainland, while Beijing has stopped issuing visas for individual travel to both Hong Kong and Macau. That cut off tourists and wealth gamblers from the mainland for Macau that derives 80% of its annual revenue from gambling.
“Macau’s visitor arrivals growth is likely to suffer on the recent outbreak of the deadly coronavirus in mainland China and the associated transportation disruptions imposed by the Chinese government,” Bloomberg Intelligence’s analyst Margaret Huang wrote in a Jan 24 note.
The looming shutdown also couldn’t have come at a worse time. The Lunar New Year holiday – a festive period when millions of Chinese travel and shop – typically gives about a 10% boost to average Macau casino revenue on the influx of tourists, according to Huang.
Visitor arrivals to Macau from mainland China have plunged 83.3% during this year’s Lunar New Year holiday, in a major blow to casino operators, according to data from Macau Government Tourist Office.
