Another new huge casino resort, Parisian, is poised to open for business in Macau in September. Macau has done fabulously in terms of economy in the past decade alongside the eruption of Chinese economy. Macau has basically turned itself into China’s Las Vegas. Nonetheless, its economy has also suffered contraction in recent years due to the soft landing of Chinese economy and crackdown on corruption in Mainland China.
The Macau government was pleased to see the growth in Macao’s casino gross gaming revenue had entered positive territory in August; following a narrowing in year-on-year monthly declines – a trend that began in the first quarter of 2016 – noted the Secretary for Economy and Finance, Mr. Leong Vai Tac.
August casino gaming revenue totalled 18.836 billion patacas, representing a 1.1 percent year-on-year growth for that month. Mr. Leong note that data from previous years had shown September casino gaming revenue was typically lower in aggregate terms than that for August: historically the contraction amount had been in the range of 1.5 billion patacas to 3.5 billion patacas.
In addition, Leong said Macau Government had authorised the Parisian Macao integrated resort on Cotai to operate a total of 150 new-to-market live-dealer gaming tables and a total of 1,600 electronic gaming machines. The new tables – all for the mass market – would be allocated in batches: a first batch of 100 gaming tables would be made available to the resort for its scheduled opening in mid-September. The remaining 50 new-to-market gaming tables would become available in two separate phases: 25 tables on 1 January 2017; and the remaining 25 tables on 1 January 2018, said Mr. Leong.
Mr. Leong stated that – when assessing applications for gaming tables – the government would strictly follow the principle of allowing a compound annual growth rate in new-to-market tables of no more than 3 percent over a 10-year period, from 1 January 2013.
According to statistics released by the Monetary Authority of Macao, money supply continued to grow in July. As total loans decreased at a faster pace than total deposits, the overall loan-to-deposit ratio of the banking sector dropped slightly from a month earlier. Concurrently, the non-performing loan ratio, an indicator for bank asset quality, kept virtually stable.
The government might be optimistic, but Moody’s Investors Service recently downgraded the Macau government’s credit rating, reflecting concerns that Macau will suffer volatile growth amid slumping gaming revenue. The world’s largest casino hub was cut by one grade to Aa3 and assigned a negative outlook. Moody’s also lowered Macau’s long-term foreign currency bond ceiling to Aa2 from Aaa and its long-term foreign currency deposit ceiling to Aa3 from Aa2.
Moody expects the economy will continue to contract during 2016 and 2017, although the pace of decline may ease.