By Max Chen and Tom Lydon
A gaming-related exchange traded fund has moved back above its long-term trend as the gambling industry regains its winning streak, with one analyst turning slightly more optimistic on Macau's casinos, reports ETF Trends.
The Market Vectors Gaming ETF (NYSEArca: BJK) rose 2.0% Friday and was trading about 5.3% above its 200-day simple moving average. BJK jumped 8.2% over the past month and was up 3.9% year-to-date.
The gaming ETF enjoyed a bump Friday after Macquarie Research upgraded the Macau casino industry to Neutral, anticipating this year's gross gaming revenue to only dip by 6%, compared to previous forecasts of a 13% decline, reports Shuli Ren for Barron's.
Wynn Resorts (NASDAQGS: WYNN) bounced 5.6% Friday on the improved outlook.
Deutsche Bank's Carlo Santarelli also maintained a Buy rating on WYNN, citing positive long-term prospects, reports Monica Gerson for Benzinga.
BJK includes a 3.6% tilt toward WYNN and 1.2% in Wynn Macau. Additionally, the ETF includes a 10.9% tilt toward China.
Macquarie attributed the more optimistic outlook to China's residential real estate investment growth, the country's import value growth and the diminished impact of the anti-corruption campaign that crippled the market.
"The MMGI is derived from a multiple regression analysis based on three pillars: 1) China residential real estate investment growth, 2) China off balance-sheet financing growth and 3) China import value growth," Macquarie analysts said. "The FY16E/17E GGR growth rates implied by MMGI are -10%/-9% YoY."
The Macquarie analysis suggests that the severe downturn in Macau's gaming industry may have finally bottomed out.
Macquarie also upgraded its price target on six Macau gaming operators. Sands China went to Outperform from Neutral and Melco Crown (NASDAQGS: MPEL) to Neutral. The analysts also believe Sands China and Galaxy Entertainment will benefit from project delays announced by Wynn Macau and MGM China.
BJK includes a 8.2% position in Sands China, 2.1% in Melco Crown Entertainment and 7.0% in Galaxy Entertainment.
Market Vectors Gaming ETF
