While Macau casinos technically remain open, most of the workers have been asked to stay home while the government continues mass testing of all residents that began on Sunday and will continue through today with the last tests for roughly 600,000 people.
Casino shares on the stock exchange tumbled on Monday morning with Sands China taking the biggest hit with an 8% drop in value. That was the biggest drop since the casinos actually closed their doors for two weeks in March 2020 and after a precipitous drop in tourist visits in March this year.
Other operators – Galaxy Entertainment, Wynn Macau, MGM China, Melco, and SJM Holdings dropped between 4%-7%.
The Special Administrative District of China relies on casino revenues for about 80% of its operating budget. Most of the population of the former Portugues enclave is employed either directly or indirectly by the gambling industry there.
The testing was mandated after dozens of cases of Covid-19 were found over the weekend. On Monday, 36 positive results were reported.
Revenues Expected to Plummet Short Term
With border restrictions tightened, most workers staying home, and even restaurants closed for dining in, revenues are expected to plummet to near-zero in the coming weeks.
Analysts stated today that Galaxy Group has enough liquidity to weather a full five years of a shutdown on one end of the spectrum and Sands Macau has a strong enough balance sheet to only survive until March of next year. Others have enough liquidity to last between 1.5 to 2 years, according to a note from DS Kim of JPMorgan Chase & Co.
Across the entry point in Mainland China, the neighboring city of Zhuhai requires those returning from Macau to quarantine at home for a week followed by another seven days of self-health monitoring.
Macau’s chief executive Ho Iat Seng said in an official statement that the newest outbreak happened suddenly and the virus has spread rapidly with no person known as the source. The current outbreak has been shown to appear in two distinct clusters. One appears to be centered on foreign workers and the other a prison employee and their close contacts. The only known link between the two clusters so far is a Macau/Zhuhai commuter.
Those infected range in age from an 8-month-old baby to a patient that is 89 years old.
Outbreak Came Suddenly Spread Rapidly
The latest outbreak came suddenly and has been spreading rapidly, Macau’s chief executive Ho Iat Seng said in a statement on the government’s website.
The last time the virus appeared in Macau was in October 2021. Nearby Hong Kong, another Chinese special administrative district, was hit earlier this year with over 9,000 residents dying among the more than one million infected. Hong Kong is still seeing new cases of at least 1,000 per week but the hospital and medical services are not overly stressed at that number.
Macau is home to a single hospital that is already stressed on a daily basis. It’s unclear if neighboring Zhuhai would take in Macau residents for medical treatment. Those traveling to Macau from Zhuhai must present a certificate dated within the last 48 hours showing they tested negative.
It’s unclear at this point whether the government will order another shutdown of casinos. Kenneth Fong, an analyst with Credit Suisse said in a note Sunday, “Players may choose not to come in the near term fearing they may not be able to return to their home town if additional cases are discovered.”
Source: World biggest gambling hub Macau shuts most businesses amid Covid-19 outbreak but casinos stay open, The Star, June 20, 2022
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