Macao Recovery Threatened by Erratic Chinese Government Policies

It is undeniable that China is a global financial powerhouse, with extensive interests in just about every industry including film and game development in the US, mining in Africa and retail investments across Europe.

It, therefore, comes as no surprise when we see them flex their financial muscle from time to time such as demanding changes to completed films, or demanding the video games lock after an hour of gaming and many other small but intrusive changes to products we see around us every day.

What is concerning is that oftentimes the actions of the Chinese government make little to no sense to those impacted by their decisions.

 Macau Attempts to Regain Its Footing

While it is true that Macau is a literal Asian gambling wonderland, it is also true that no wonderland can survive without people willing to visit its shores. With the global shuttering of international and local travel, Macau was a virtual ghost town for most of late 2019 into 2020.

From April to September 2020 the region reported that casino revenues were down between -90% up to -97% compared to the same months in 2019 with the region only showing a cumulative loss of -79.3% for the year.

Thankfully Macau casinos were able to open again in 2021 and the region has subsequently seen a steady but slow growth in gambling revenues showing an overall improvement of 64% by the end of July compared to the same period in 2020.

Despite a strong percentile growth however market analysts still only expect the region to regain around 50% of its pre-Covid valuation by the end of 2021. This is due to the slow lifting of the current travel bans and a new wave of Covid infections that has the local market hesitant to travel and gather with strangers.

As if the Macau gambling industry was not facing enough challenges to its solvency the Chinese markets and its associated enterprises were rocked by an unexpectedly aggressive stance by the local regime on technology-based companies.

China Yanks the Stock Market Rug Out

China has been openly hostile to emergent technologies such as Bitcoin and the blockchain due to its ability to bypass the ‘digital Great Wall of China’ that the communist regime uses to insulate its people from the free world.

This loathing was highlighted by a focused campaign aimed at stunting non-government managed technology enterprises and consumer-facing internet companies. The resultant market panic decimated billions of dollars of value in companies such as Ali Baba, Tencent and Meituan.

They even went so far as to outlaw for-profit online tutoring services, a massive market category for a country-driven to achieve insane academic heights.

Naturally, the market fallout from this erratic behaviour was felt in Macau as its international trading partners saw large scale panic selling knock as much as 6% off their stock valuations.

The question is how long before these stock market feints turn into something more serious? China is actively developing and testing its Digital Yuan stablecoin. Once it can separate itself from the ebb and flow of the "US dollar-dominated market" it will be interesting to see how far China will go to live off the current global financial grid.