Macau casinos brace for more possible lockdowns

Casino concessionaires in Macau have a thing or two to fret about as Chinese president Xi Jinping is determined to continue the country’s zero-COVID policy. While good PR and arguably good for public health, the restrictive measures imposed by China on its megapolises such as Shanghai and Beijing have been the root of many economic ills.

The most recent Labor Day Holiday saw a slump in visitors from the mainland, with casinos not nearly attracting as many people as they had hoped for precisely because the neighboring province of Guangdong was under strict lock and key, with similar travel restrictions across the mainland.

Xi reiterated his zero-tolerance policy on COVID during last week’s session of the Politburo Standing Committee. He argued that the prevent and control policy was inscribed in the Party’s commitment to keeping citizens safe, and urged authorities to "go against the current, not retreat."

In other words, economies in particular regions may suffer should there be outbreaks of COVID which will not be controlled piecemeal but brought under the same restrictive measures This makes casino concessionaires uneasy, as the COVID pandemic continues to threaten their operations amid reregulation of the market.

There are already examples of how bad new lockdowns could be with Shanghai, Beijing, and other important administrative centers in China serving as testbeds for the government’s measures. It’s not just the local economy that is being impacted though, as any lockdown in China is sending ripples on a global scale.

Macau’s casinos should be capable of weathering the storm for the time being, and even a fresh round of lockdowns shouldn’t prove too much to handle at this point. However, some casino concessionaires are currently suffering from liquidity issues which may put their long-term resilience to a test.

SJM Resorts is one of the companies in Macau that may be struggling as its liquidity is running short, although these reports have been dismissed by the company. SJM assured that it’s in a good financial position notwithstanding some financial delays. Either way, a new round of lockdowns on Macau would not have a positive impact on the casinos’ bottom line.

The good news is that more lockdowns now would most likely mean fewer emergency shutdowns later.

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