HK Stock Market Move | Gambling stocks continue to decline, with MELCO INT'L DEV (00200) falling more than 3%. Morgan Stanley points out the short-term downside risks in gambling stocks.

The decline in gambling stocks continues. As of press time, MELCO INT'L DEV (00200) fell 3.44% to HK$3.37; Sands China (01928) fell 2.74% to HK$12.8; WYNN MACAU (01128) fell 1.62% to HK$4.86; MGM CHINA (02282) fell 1.37% to HK$9.34. On the news front, Macao SAR Chief Executive Ho Iat Seng mentioned in the first policy address to the Legislative Council of the SAR that the gambling industry's first quarter revenue did not meet expectations in this year's fiscal budget. If the subsequent revenue still falls short of the target, it will directly impact the overall fiscal foundation. Morgan Stanley believes that there is a downside risk in Macau gambling stocks in the short term. The bank pointed out that the fiscal outlook for Macao in 2025 is weak. Per capita consumption continues to decline locally, reflecting weak demand that is unlikely to recover in the short term. The gambling industry faces challenges, with EBITDA expected to decline by 5% year-on-year in the first quarter of 2025, despite total gambling revenue increasing by 1%, indicating negative operating leverage and declining profit margins. UBS released a research report stating that in various submarkets, mass market gambling revenue has fallen by about 5-6% month-on-month so far this month; VIP gambling revenue has also dropped by about 4-5% month-on-month, with the VIP hold rate at about 3%-3.3%. Looking ahead to the upcoming Labor Day Golden Week, the bank predicts a weaker trend in Macau hotel bookings compared to the same period last year. According to the bank's tracking of 30 hotels, the number of hotels that are fully booked or sold out has decreased by 5 compared to the same period last year, and the prices of similar hotels have decreased by about 15% compared to the same period last year.