30 Jan

A Rise In China’s Consumer Confidence Helped Casinos

WRITTEN BY Shawn Bolton

Consumer sentiment 

China’s consumer sentiment indicator measures the level of consumer confidence in the economy. The index rises when consumers gain confidence in the economy.

A Rise In China’s Consumer Confidence Helped Casinos

In China, consumer confidence increased to 105.5 in November 2014—from 103.4 in October 2014. It averaged 109.66 from 1991 until 2014. It reached an all-time high of 124.6 in August 1993. Its record low was 97 in November 2011. China’s consumer confidence is reported by the National Bureau of Statistics of China.

In China, the Consumer Confidence Index is based on a survey of 700 individuals. The individuals are more than 15 years old. They’re from 20 cities all over the country. This composite index measures the consumer expectation of future economic trends. It also measures consumer satisfaction with the current economic scenario.

The index measures consumer confidence on a scale from zero to 200. “200” indicates extreme optimism. “Zero” indicates extreme pessimism. “100” indicates neutrality.

A Rise In China’s Consumer Confidence Helped Casinos

China’s services sector

China’s services sector grew at a quick pace in the three months ending in December—even though manufacturing activity slowed down. The HSBC China Services PMI (purchasing managers’ index) rose to 53.4 in December from November’s 53.

Qu Hongbin is a chief China economist at HSBC. He said, “The services sector continued to hold up well amidst the manufacturing downturn, providing some counter-weight to the downward pressures on the economy.”

Key takeaways

Improving consumer sentiment along with growth in the services sector usually indicates increasing incomes due to a better job market. It indicates growth prospects for the overall economy. This is positive for casino stocks—including Las Vegas Sands (LVS), Galaxy Entertainment, Wynn Resorts (WYNN), and Melco Crown Entertainment (MPEL).

It’s also positive for ETFs like the VanEck Vectors Gaming ETF (BJK) and the Consumer Discretionary Select Sector SPDR Fund (XLY). These ETFs invest in leisure stocks. BJK has an ~25% exposure to these companies. XLY has less than 1% invested in these companies.

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