Long downtrodden Macau casino stocks could get a much-needed lift as China takes steps to shore up the world’s second-largest economy while encouraging more consumer spending.
The General Office of the Communist Party of China Central Committee and the General Office of the State Council recently unveiled an array of policy proposals aimed at accomplishing a variety of objectives, some of which could have material effects on Macau gaming equities. Those include consumer debt reduction, higher minimum wages, and breathing more stability into China’s financial markets.
In a new report to clients, Vitaly Umansky of Seaport Research Partners said China’s fresh stimulus measures could be “a positive tailwind for Macau’s revenues.”
“The importance of shifting economic focus and prioritisation of the consumer economy is of critical importance for China’s future economy and consumer spending power,” observes the analyst.
No ‘Helicopter Money’ but Potential Gains
For several years, Macau casino stocks have been laggards as gross gaming revenue (GGR) in the casino enclave has yet to reach the heights seen before the coronavirus pandemic. Further hindering the asset class over that time was weakness in the broader Chinese equity market and significant, negative credit events in the country’s real estate sector.
Umansky noted that while there’s no “helicopter money” — or direct cash payments to Chinese citizens — coming, Macau casino stocks could still be beneficiaries of broader stimulus efforts.
The analyst pointed out that while concessionaires with more exposure to premium mass and higher-tier clients have largely been resilient, those dependent on mass-market players have scuffled. Las Vegas Sands’ (NYSE: LVS) Sands China unit — the largest Macau operator — fits that bill. The stock is down year to date, but could get a lift if stimulus plans drive increased mass market visitation to Macau.
“Our view on China economic improvement and corresponding uplift in consumer sentiment could lead to stronger base mass recovery (with continued premium growth) in 2025 and into 2026,” adds Umansky.
Mass-market players — the core constituency for Sands China and Galaxy Entertainment — are more price-sensitive and more likely to dial back discretionary spending if they perceive the Chinese economy to be lethargic or nearing contraction.
Stimulus Could Overshadow Tariffs
The Trump Administration’s heavy-handed approach to trade relations with China, including tariffs, has been a headwind to Macau casino stocks. However, some analysts argue that, at worst, only the three US-based Macau operators could feel ripple effects in a trade war, and even that scenario isn’t guaranteed to materialize.
For his part, Umansky believes US tariffs against China could compel the latter to take steps to boost domestic consumption, which would be positive for Macau.
“With an increasing tariff regime in the US, we expect China policymakers to more forcefully look at expanding consumption and improving domestic consumer confidence which the latest set of actions highlights. Such policy initiatives should have a positive tailwind to Macau revenues,” concludes the analyst.
