China's hard landing risks weigh on Macau

Fitch Corp said a hard landing in China's economy was a "high-impact downside risk" to the Macau gaming industry.

"Macao's game-dominated economy is vulnerable to economic development, a major demand source in mainland China," the rating agency said in its latest forecast.

But Fitch estimates China could rebalance its economy and avoid a hard landing.

Fitch yesterday maintained Macau's long-term rating at 'AA-', the fourth-largest investment rating, with a stable outlook.

The gross gaming revenue (GGR) is equivalent to about 85% of Macau's gross domestic product. Macau earned an annual GGR ($45 billion) last year, an increase of 18.6% compared to 2012.

Fitch said last week that Macau's gaming market "remains strong."

Direct taxes from gaming accounted for 81.5 percent of Macau's government's total revenue last year, according to official data.

Macau is characterized by above-average volatility with respect to growth, inflation and government revenue, Fitch said.

The city's real GDP growth averaged 14.3% in the five years to 2013, with Fitch predicting GDP will "average growth of 9.8% in 2014-2015."

"This is the fastest growing economy among the 'AA' rating countries, with average real GDP expected to be much lower at 2.4% over the same period," Macau said.

However, it warned that "Macao's limited macroeconomic policy lever range is a relative weakness compared to its grading peers."

Fitch assumes there is no real change in China's policy on gaming and tourism, which could have a serious impact on Macau, but said a severe economic shock from China could "trigger negative valuation measures" for Macau given the close links between the economy and finance.

BY: 바카라사이트 추천