Earlier today, Nomura analysts Wendy Liu, Harry Curtis, and Stella Xing issued a note, commenting on the current situation in Macau and the possibility for local government to impose a cap on the number of visitors from Mainland China.
According to the experts, this will certainly result in a decrease in the number of both mass and VIP casino players. They also said that the proposal will probably be followed by more measures that will tighten the control over Macau’s gambling industry.
Not long ago, Alexis Tam Chon Weng, the city’s Secretary for Social Affairs and Culture, stated that local government is planning to cap the number of people from Mainland China who enter the city. He told local media that Macau’s authorities will discuss the matter with the Chinese government. Mr. Tam also pointed out that no limit will be introduced at this point. What is more, if implemented, it will probably vary for the different seasons of the year.
Yet, the official said he hopes the cap will be imposed before the end of 2015.
A team of Wells Fargo Securities, LLC analysts, led by Cameron McKnight, shared they did not expect that discussions about the implementation of such a cap would be brought about.
Nomura’s experts commented that China wants Macau to be less reliant on its gambling industry. This, in turn, is expected to lead to a decrease in the number of regular players, an increase in the number of tourists, and last but not least, to improve local economy and the city’s residents standard of living.
The analysts also suggested that if the cap proposal gets the necessary approval, it is likely to limit the number of tourists under the so-called individual visit scheme for people coming from Mainland China. What is more, the number of issued visas under the IVS will probably be reduced during peak periods such as the Chinese New Year and the Golden Week, which takes place in October.
Last year, a total of 31.5 million tourists entered the administrative region. Of those, more than two-thirds came from Mainland China.
The IVS makes it possible for mainland tourists to travel to Macau individually without being part of a bigger tour group. Statistics showed that 9.6 million Chinese visitors entered the city under this scheme in 2014. They constituted 45% of the overall number of Mainland visitors.
Nomura’s experts wrote in their note that Mr. Tam did not talk about the implementation of a cap on groups visas. These accounted for 47% of the Chinese tourists that visited Macau last year. Reportedly, very few of those were traveling for gambling purposes.
