Macau Lifts Coronavirus Travel Restrictions From Mainland China, Boosting Casino Stocks

Shares of casino stocks rallied Tuesday after it was announced that visitors from mainland China would no longer be required to quarantine upon entering the popular tourist island of Macau.

What Happened: Tourists are now able to enter Macau from the mainland to visit its many gaming casinos and resorts.

The removal of this final restriction lifted shares of Wynn Resorts Ltd WYNN, Las Vegas Sands Corp LVS and MGM Resorts International MGM as much as 8.5% in Tuesday’s session.

Although revenue in gaming surged last week during the week of Lunar New Year, according to Bloomberg, Chinese mainlanders now have the freedom to return to the casino resorts without social restrictions, which could help to revive the sector.

BofA Securities analyst Billy Ng expects demand to return in March and April.

Why It Matters: Macau, with an economy based largely on casino revenue, was severely affected by coronavirus lockdowns.

With their Macau casinos closed, shares in Wynn, Las Vegas Sands and MGM fell an average of 71% in the three months after COVID-19 was identified in Wuhan, China in January 2020.

Comparing tourism from December 2019 and December 2020, “mainland visitations were down 77% YoY” for the month of December, while “overnight visitations from mainland were down 75% YoY” BofA's Ng said in a note.

What’s Next: While Macau opening up to tourists from the mainland is a great sign for the struggling casinos, a full recovery won’t happen until it’s safe to open up to international guests.

In January, tourism from Hong Kong was still down 89% compared to 2020.

Similarly, “international visitations were still down 100% as foreign passport holders are still not allowed to enter Macau,” the BofA analyst said.

(Photo of Cotai Strip by Macau Photo Agency on Unsplash.)