Macau casino stocks rally again as China reopening hopes increase

Macau, China city skyline at dusk.

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Macau casino stocks continue to track higher after officials said Chinese tour groups will be allowed to return to the gambling center as soon as November.

On Wall Street, J.P. Morgan analyst Joseph Greff said the firm looks at the policy news as a sizable positive development for a sector that has been viewed as very tough to invest in by the buy-side, given a miserable near-term operating environment and the lack of anyone’s ability to reasonably game theory when travel mobility would start to improve between Mainland China, Hong Kong, and Macau.

"We (still) like LVS the best here and view it as play not just in Macau recovery but also positive estimate revision coming out of its Marina Bay Sands property in Singapore, a tourism market that is still early in seeing a lift in its internationally sourced visitation (just 6 months in). We’d expect incremental capital return as both of its markets experience a recovery (something that should distinguish LVS from the others)."

Shares of Las Vegas Sands (LVS) rose 2.22% in premarket action on Tuesday to follow Monday's 11.81% jump.

Shares of Wynn Resorts (WYNN) moved 1.85% higher to add to Monday's 11.99% rally.

Shares of Melco Resorts & Entertainment Limited (MLCO) tacked on another 3.01% after soaring 25.47% on Monday.

What to watch: Is the loosening of Macau tourism rules an early indication that Beijing will move away from a zero-tolerance COVID policy? Chains like Yum China (YUMC), Luckin Coffee (OTCPK:LKNCY), and Starbucks (SBUX) could be beneficiaries if that were the case.

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