I watch Macau’s casino revenue as an indirect indicator of China’s economic activities. The revenue growth has been pointing the slower growth in China. Fitch has just revised the casino revenue forecast for 2012 from 15% to 10-12% for the full year on the impact of China’s slowdown on casino revenue.
This is the second downward revision of the revenue forecast. The last downward revision was done on 8 June 2012.
Fitch has revised its 2012 Macau revenue growth forecast to 10%-12% from 15%, reflecting our more cautious view with respect to the near-term impact of the slowdown in China. This is our second downward revision over the last couple of months; as on June 8, 2012 market growth revenue forecast was reduced to 15% from 20% upon initial signs the slowdown was greater than original expectations. Macau market revenues grew 42% in 2011 and 58% in 2010.
Overall market revenues were up almost 20% year to date through June. However, the slowdown became noticeable in May when revenues grew only 7.3%, followed by 12.2% in June. We expect July to also reflect a sluggish trend, possibly in the low-single digit range, as Typhoon Vicente had some impact with the disruption of ferry service to Macau from Hong Kong. Our updated forecast implies low-to-mid single-digit market revenue growth for the rest of 2012.
The chart below shows the latest look at Macau casino revenue growth and China’s GDP growth: