Macau Economy To Shrink Almost 14% This Year, Economists Warn

According to the University of Macau economics professor Fung Kwan, the city's economy will shrink by 13.6 percent in 2016.

In addition, Fung said that 2016 gross gaming revenue totals will come in 15-20 percent below 2015's totals. Macau started off 2016 with a 21.4 percent gaming revenue decline in the month of January.

Despite the negative momentum, Macau did get some good news at the end of January. Last Friday, Li Gang, director of the Chinese government’s Liaison Office in Macau, said that China is currently discussing potential legislative measures to boost Macau's economy.

A.B. Bernstein analyst Vitaly Umansky believes that the potential for supportive measures is one of several reasons why long-term Macau investors will eventually be rewarded for their patience.

Related Link: How Macau Growth Could Turn Positive By June 2016

"While the Macau gaming industry will remain volatile over the near-term, we view the industry as a secular growth story driven by the paradigm shift from VIP to Mass," Umansky explained.

Bernstein has an Outperform rating on Melco Crown Entertainment Ltd (ADR) MPEL and the China units of Las Vegas Sands Corp. LVS, MGM Resorts International MGM and Wynn Resorts, Limited WYNN.

Disclosure: The author owns shares of Melco Crown Entertainment and Wynn Resorts.