Quarter one results for Melco International did not gain as much as the company hoped. The latest news from Macau is that stock prices are falling with the Yuan.
June’s gross gaming revenue may be lower due to stock prices falling. Melco, Wynn, MGM, and Las Vegas Sands all saw their stock prices plummet.
Investors will see high volatility with the current sell off of stock.
Market Analysis from Experts
The Macau market fall for the companies mentioned is not unexpected. Analysts stated in March that they felt the stocks for Macau would be unlikely to go higher until September. It was due to the stocks being at new highs, which suggested that most investors would take their profits, and cause the stocks to decrease.
The Shanghai Composite Index is showing a bear market, which has 20% below the highs stock prices were at. Macau stocks fell with the larger Chinese indexes. VanEck Vectors Gaming ETF for example is mostly full of Macau stocks, and it is 4 percent down for the year, while it was previously up by 8.6 percent in May.
Macau is most likely going to continue to trade with ups and downs that are unpredictable. Analysts do not believe there will be a clear trend that says get in or stay out, until the trade war is worked out a little bit.
Macau is certainly following the Shanghai Composite Index fairly closely, but when compared to the general Chinese index, Macau is showing to be slightly stronger. It could mean there is quite a bit of bearishness left in the market for Macau’s stocks. They may end up bottoming out along with oil stocks.
It is interesting, but if one looks at the graphs for Oil and Macau stocks, they seem to follow each other fairly closely. It is like if someone is in oil, they are also investing in Macau gaming stocks, or they are leaving the market at the same time. You can see that Macau crashed in 2014 up until 2016, with similar oil ETFs working the same way. It might be counterintuitive to look at graphs in such a way, but when commodities fall, most stocks rise, and Macau is not doing that. Instead, Macau is following oil, a commodity investment.
Part of the reason for such a correlation may be relating to the dollar and how oil moves inversely to the dollar. The Yuan may also be part of the reason for such a correlation.