Asia gaming and consumer discretionary analyst

Michael Ting

Thematic (Sector/Industry)

Macau Hotels, restaurants and leisure / Thematic (Sector/Industry)

<p>Despite the recent relaxation in travel visas to Macau from the Mainland, the recovery in sector revenues has been weaker than expected. Headwinds such as increased government scrutiny on capital outflow has likely hurt gaming sentiment demand from higher spending VIP and premium mass players. We expect these trends to continue and hence believe that Macau gaming stocks could underperform in the near term. However, beneficiaries of the capital outflow restrictions could boost domestic luxury demand and benefit stocks such as Chow Tai Fook whose share price is +17% MTD vs. -7% for the Hang Seng Index.</p>

Despite the recent relaxation in travel visas to Macau from the Mainland, the recovery in sector revenues has been weaker than expected. Headwinds such as increased government scrutiny on capital outflow has likely hurt gaming sentiment demand from higher spending VIP and premium mass players. We expect these trends to continue and hence believe that Macau gaming stocks could underperform in the near term. However, beneficiaries of the capital outflow restrictions could boost domestic luxury demand and benefit stocks such as Chow Tai Fook whose share price is +17% MTD vs. -7% for the Hang Seng Index.

Macau: If It's Not One Thing, It's Another