China: Macau Casino Stocks Soar as COVID Restrictions Set to Ease

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Sep 26, 2022

Image copyright: Bloomberg [via The Wall Street Journal]story last updated Sep 28, 2022

The Facts

On Monday, shares of casino companies operating in Macau soared after the tourism-dependent city said it would ease COVID restrictions for visitors from mainland China.
Macau's Chief Executive Ho Iat-seng said the city would start allowing group tours from the mainland, as well as establish easier e-visa rules beginning in November. Following the announcement, the city's six licensed casino company's saw an overall stock price surge of over 10%.

The Spin

Narrative A

Though the easing of COVID restrictions is undoubtedly a hopeful sign, an increase in tourism won't mean much to American casinos if they can't renew their licenses. If China pursues a protectionist agenda and blocks US companies, it could be a sign of market decline for many US investors in the region.

Forbes

Narrative B

With JPMorgan and Citigroup now bullish on American casinos like Las Vegas Sands subsidiary Sands China, the only response to this news should be optimistic. While licensing agreements are, of course, unknown right now, the fact that China is re-opening its borders to Macau should be what investors are focused on.

Market Watch