By Clarence Leong
Shares of Macau casino stocks rose sharply Monday morning, after the Macau government's easing of Covid-19 policies boosted hopes of a sooner-than-expected return to normal.
Sands China Ltd. jumped 16% to 20.50 Hong Kong dollars (US$2.61), heading toward its best day in more than six months. Galaxy Entertainment Group Ltd., Wynn Macau Ltd. and SJM Holdings Ltd. advanced between 9.1% and 13%. Hong Kong's benchmark Hang Seng Index added 0.5%.
The casino sector's gains came after news over the weekend that Macau is set to resume issuing electronic visas and allowing Chinese group tours around late October or early November.
Analysts said the easing came earlier than expected and could facilitate a faster return of Chinese visitors to Macau.
JPMorgan said the move was the most significant easing since Macau's border with China reopened two years ago. The move should "alleviate friction for a Macau trip, as well as signal to many that it's OK to visit Macau," JPMorgan analyst DS Kim said in a note.
Mr. Kim said the lack of electronic visas has been "the most common push-back we heard," and noted that group tours used to account for about 25% of Chinese visitors to the city before the pandemic.
"Now that Macau has a clear roadmap to recovery, this neglected sector should recapture investors' attention," Citi analysts said in a note. Citi added that this shows Beijing fully supports Macau's economic recovery.
Both Citi and JPMorgan have a bullish stance on the sector. Citi's top picks are Sands China and Galaxy Entertainment, while JPMorgan's top pick is Sands China.
But other analysts are more cautious. The gambling hub's "pace of recovery [is] still uncertain," Jefferies analyst Andrew Lee said in a note. Meanwhile, "quarantine fears continue to deter overseas travel given China's rapid lockdowns strategy during new local infection cases," Mr. Lee added.
Jefferies projected that gaming revenue in 2022 will only be 14% of prepandemic levels, with revenue improving further to 46% of prepandemic levels in 2023.
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