With solid August gaming numbers, Macao continues to see
strength relative to the rest of the flailing Chinese economy (
[caption id="attachment_72970" align="alignright" width="300"
caption="Things are starting to look brighter in Macao"]
The government of Macao released its August gaming numbers
earlier this week; to the relief of investors long gaming stocks
with exposure to the former Portuguese enclave, gaming revenue was
solid juxtaposed to slowing growth in Mainland China.
Although revenue in Macao came in at only 5.5%
, this represented a $3.3 billion haul, the second highest total
ever for the Special Administrative Region.
Given that Macao was able to rake in this much cash during a
period of economic concern in Mainland China -- where most of its
clients come from, in a month without a significant Chinese
investors in casino stocks should be heartened
by these results.
Until recently, casino stocks like Las Vegas Sands (
), Wynn Resors (
), and Melco Crown Entertainment (
) have struggled as a result of concerns over both the Chinese and
While still cheap on a relative basis, casino stocks jumped
upwards because of the massive risk-on trade that manifested
itself in Thursday trading thanks to the European Central Bank
announcing an increase in sovereign debt purchases.
If this move is a temporary shot in the arm, and the
long-awaited pull back in equities materializes this fall,
casino stocks could be a steal after another move lower
. As China is expected to get back on track later this year, stocks
like Las Vegas Sands, Wynn, and Melco will all likely benefit.
China has two major holidays coming up over the next five months
with Golden Week in October and Chinese New Year in
January/February. Both of these holidays should attract hundreds of
thousands of punters to Macao.
As a result, you could consider starting a position in Macao
gaming stocks here, as long as you keep some money on the sidelines
to put into these stocks for when a pull-back arises.
Disclosure: Author and family are long MPEL, WYNN, LVS, and
may engage in trading in these names in the next 72 hours.