Macau Casino Stocks Tumble, as COVID-19 Infections Detected in Zhuhai
Posted on: October 10, 2022, 10:56h.
Last updated on: October 10, 2022, 10:56h.
Macau casino stocks are trading significantly lower today after newly confirmed COVID-19 cases were detected in nearby Zhuhai just hours after the casino hub wrapped up China’s National Day Golden Week.
The weeklong annual holiday commemorates the establishment of the People’s Republic of China on October 1, 1949, Golden Week gives most workers seven days of paid time off. Prior to the pandemic, mainlanders were encouraged to use the time off to travel and explore the nation, and many ventured to China’s two Special Administrative Regions — Macau and Hong Kong.
Cross-border travel has been discouraged throughout the pandemic. But 2022 saw a rebound in visitors to Macau during the holiday, as the enclave logged 163,000 visitors from the mainland for the October 1-7 period. Only 8,200 mainlanders came to Macau during the 2021 Golden Week.
But the Golden Week rebound celebration was short-lived after reports surfaced of people testing positive for the coronavirus upon returning home. Zhuhai, which borders Macau to the north, said five new cases were confirmed on Sunday, October 9. It’s the first cluster of new infections detected there since July.
Stocks Fall
Four of Macau’s six casino operators are publicly traded entities in the US. And with “zero-COVID” lockdowns looming in Zhuhai and possibly elsewhere across the Guangdong Province, investors are reducing their positions in the casino firms.
As of midday trading, Las Vegas Sands is down 10%, MGM Resorts is down 5%, Wynn Resorts is down 12%, and Melco Resorts is off 9%.
China is one of the few places in the world that is still resorting to lockdowns in wake of new COVID-19 cases.
The maintaining of the nation’s “zero-COVID” policy is largely seen as a political ploy in the buildup to the once-every-five-years party congress that begins Sunday, October 16. The Communist Party is seeking to present a positive image of its pandemic response during the National Congress where President Xi Jinping is expected to be re-elected for a third term as the “people’s leader” in what would be a first for the country.
China has already initiated fresh lockdowns and travel restrictions in parts of the Shanxi Province after positive cases were reported during a citywide post-holiday testing blitz. And in the Inner Mongolia region, the capital Hohhot is on lockdown after reporting more than 2,000 new cases over the past 12 days.
Travel Resumption
Investors in Macau casino stocks hope the Zhuhai COVID-19 cluster does not result in an outbreak. A local mass testing round is underway to determine the scope of the latest spread.
The timeline for when China resumes its e-visa scheme that more easily allows mainlanders to visit Macau will depend on the timeliness of containing the holiday outbreak. Many expect China to restart the Individual Visit Scheme (IVS) in November.
IVS has been suspended since 2020. Nearly half of all visitors to Macau in 2019 gained authorization to travel to the region via IVS.