Casino stocks spiked Monday as Macau city officials signaled China is set to ease Covid-era travel restrictions, making it much easier for people to return to globe's largest gambling hub.
Macau leaders have indicated that China would resume an e-visa program for mainland-China travelers and group tours, with plans to implement the relaxed travel requirements in November.
This sent casino stocks with Macau exposure rocketing in Monday's market trading. Wynn Resorts was up 12% and Las Vegas Sands increased 11.7%, easily Monday's top two performers on the S&P 500 index. Melco Resorts & Entertainment skyrocketed 25.5%.
MGM Resorts International, which has less exposure to Macau than its competitors, rose 4.4% intraday before reversing for a 0.3% loss.
Macau, a Chinese special administrative region, is the only place in the country where citizens can legally gamble. Visitors from mainland China account for the overwhelming majority of revenue for casino operators in the city, but that has dramatically decreased over the last two years of Covid restrictions.
After initial lockdowns early in the pandemic, Macau was once again on shutdown this summer in an attempt to curb a Covid outbreak. China's pandemic mitigation efforts resulted in an estimated combined loss in the second quarter of $478 million for Macau casino operators, according to Bloomberg.
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Throughout the pandemic, there has been tighter border control between China and Macau, which has cut down on tourism and e-visas. Before the pandemic, gamblers used these visas to make quick trips to the city.
Tourist from China currently need a visa appointment followed by a weeklong approval process. The individual visa program made up around 50% of Chinese visitors to Macau in 2019 while tour groups accounted for about 25%, according to Reuters.
Casino stocks including Wynn Resorts and Las Vegas Sands are far off from being market leaders. They tend to be very sensitive to blips in China that could affect consumer behavior. Both casino stocks have also been in downtrends since the U.S. launched its trade war vs. China in 2018. Wynn is around 65% below its 2018 high. Las Vegas Sands has lost 50%.
WYNN stock appeared to be approaching its 200-day moving average on Sept. 20, but then dipped 15% and dropped back below the 50-day line. Shares are back above their 50-day line Monday.
Meanwhile MLCO shares have been trading along their 50-day line since June. Shares vaulted above those levels Monday and hit their highest levels since early April. MLCO stock is nearing its 200-day line.
MGM stock plunged below its 50-day line late last week, and has a lot of work just to reclaim that level.
However, with this bounce from loosening travel requirements to Macau, LVS stock is back around its 40.08 buy point from a flat base. Shares briefly topped that buy point on Sept. 20, but then fell sharply along with the broader market. On Monday, Sands stock closed at 39.65, above its 200-day and 50-day moving averages.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
