Macau should ride Chinese economy woes

Macau should ride Chinese economy woes

Tuesday, August 18, 2015
China's currency devaluation is unlikely to cause further woe for Macau

China’s dual devaluation of its currency last week should not cause further problems for Macau’s beleaguered gaming sector.

That’s the view of Aaron Fischer, regional head of gaming and consumer research at CLSA, who told the South China Morning Post newspaper that Chinese government attempts to boost its economy will not effect the casinos in the world’s biggest gambling zone.

Macau’s gaming industry has been in decline for 14 months due to a crackdown by the Chinese authorities’ sweeping anti-corruption campaign, with revenues down 34.5 per cent year-on-year at 18.6bn patacas (€2.1bn/$2.3bn) in July.

“The devaluation will have a negative impact, but not overly material," Fischer said. “I don't think it will have much impact on the gaming industry, because of the Chinese gamblers' mentality. They think they will win, so they are not thinking about the currency.”

Meanwhile, Macau’s chief executive Fernando Chui Sai-on last week aimed to reassure the public about the future of the industry, after figures showed that direct taxes from gaming dropped 35.7 per cent in year-on-year terms during the first seven months of 2015.

Direct taxes from gaming brought in 80.5 per cent of the Macau government’s total revenue in the seven months to July 31, meaning that the industry’s declining fortunes have a major effect on public spending in the jurisdiction.

“The industry has returned to a comparatively stable level … we will make adjustments according to the reality we face,” Chui said. “20bn patacas a month makes us 240bn a year, giving us a stable financial situation, compared to our spending.”

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