Based upon credit data, it is expected that gambling at Macau casinos by VIP members will peak through the end of 2013 and begin a decline in 2014. The news shouldn’t bode well for some of the major casino players there, as Wynn, MGM, Galaxy Entertainment Group, and Melco Crown Entertainment all collect half of their Macau table-gaming profits from the high-roller segment.
The chart below compares “growth of Macau’s junket volumes and China’s so-called social financing, a measure of credit activity, on a 12-month trailing basis.” This lending typically translates to high net worth spending in Macau about 6-12 months into the future as the liquidity filters through to discretionary spending including gambling.
“The massive credit growth in the first half is yet to flow through Macau gaming given the lagged effect,” Cameron McKnight, a New York-based analyst at Wells Fargo, said in an e-mail. “The more recent slowdown could have a knock-on effect some time in 2014.”