The Trade War's forgotten front: Macau casinos

When business reporters discuss the ongoing trade war between the US and China they tend to talk about auto and electronics sales, not casinos. The war for worldwide economic supremacy between the two superpowers has had a major impact on the Macau gaming industry,though some relief could be in sight for the mega-casinos that serve China’s elite.
Earlier this week, a group of analysts from finance giant Morgan-Stanley issued a report suggesting that strong November revenue gains and a possible trade war truce between the US and China could bode well for publicly traded Macau gaming stocks.
The report, which was reported on by the Macau News Agency, suggests that Macau’s short-term future is pretty bright.
“The potential positive outcome as it relates to trade tensions between China and US could boost sentiment and, thus, drive valuation multiples. We think these should remove overhang from concession renewal, even though there is no direct revenue/cost impact,” the report stated.
While the ebb and flow of the commerce conflict between Donald Trump and Chinese President Xi Jinping definitely has an impact on Macau’s revenue flow, there are other factors that could be influencing the island’s surging fortunes. In particular, other analysts point to the recently opened Hong Kong–Zhuhai–Macau Bridge (HZMB) as the source of rising revenue in Macau casinos.
The new bridge (technically a bridge and tunnel system, opened on October 28 to great fanfare and connects the island to Hong Kong and the Chinese mainland. It’s believed that the bridge is also opening Macau casinos to a new group of less affluent Chinese who didn’t previously have access to the entertainment paradise.
Morgan Stanley’s analysts make it clear that Macau’s positive fortunes are, potentially, only short-term. The easing of trade war tensions is both recent and not likely to be long lasting. At any moment tensions and tariffs could flare up, leaving Macau in a difficult spot.