Macau may not be immune to recession

Following the stock market tumble that left all six Macau casino licence holders down by at least 5 percent, MarketWatch reports on analysts’ concerns on the continued meteoric rise of gambling revenues from the former Portuguese enclave, largely attributed to big-spending tourists from the China mainland.
Analysts opine that China’s wealthiest class is cutting back on discretionary spending.  One indicator of the phenomenon is slower growth in sales of German luxury cars which they say is a generally reliable indicator of China’s affluent classes discretionary spending with an approximate three month lag.
Any downturn recorded in high-rollers’ spending in Macau would more than likely be offset by the accelerating influx of China’s middle class which is possibly clouding the picture, said Deutsche Bank analysts.  These mass-market gamblers are expected to be seasonal with a sharp drop in tourist numbers predicted from mid-October onwards.
With the possibility of a sharp decline in China’s economic growth should the U.S. and Europe fall into deeper recession, Macau’s revenue growth could potentially decline to as little as 10 percent.
“We disagree with the consensus view that Macau is immune to a recession,” said Deutsche Bank.

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