Macao casino’s stock movement

Macao is the largest gaming hub in the world and the only place in China where gambling is legal. The region has seen extraordinary growth in the past decade and a half but has also seen a similar fall since the Chinese government imposed anti-corruption restrictions in 2014. This has scared away most of the VIP gamers who once flooded the region.

Macao Casino’s Stock Rises on Revenue Growth

The prices of related stocks have understandably followed suit. Wynn Entertainment (WYNN) lost ~54% in 2015, while Melco Crown (MPEL) lost 33%, Las Vegas Sands (LVS) lost 25%, and MGM Resorts (MGM) gained 8%.

A better year

However, 2016 has so far been a better year for Macao casino stocks, with hopes of stabilization making their rounds. In fact, revenue growth in August has brought a lot of cheer to casino stocks.

YTD (year-to-date) as of September 9, 2016, LVS has gained 26.5%, while MGM gained 9.9%, and WYNN gained 43.4%. MPEL has continued to lose, shedding almost 8.5% YTD, but this is because Melco Crown depends almost completely on Macao and only has one other stake in a small resort in the Philippines.

Notably, the Market Vectors Gaming ETF (BJK), which acts as a proxy for the gaming and casino industry, has also gained 12.5% YTD. The broader market as replicated by the SPDR S&P 500 ETF Trust (SPY) has also gained ~3.7% during the same period.

Series overview

In this series, we’ll discuss how the gaming industry in Macao has been performing lately by analyzing key indicators, such as gross gaming revenues and visitor arrivals. We’ll also take a look at how the Chinese economy could affect gaming companies in the Macao region.

Let’s start with what the analysts are saying.

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