Macau's reported gaming revenues and China's 7.7% GDP growth were for the same quarter
Today's harsh market reaction would seem to indicate that China's reported GDP was some kind of harbinger of Macau gaming revenues.
I'd rather have strong gaming revenues amidst a weaker than expected GDP reading than weaker gaming revenues amidst a stronger than expected GDP reading. So much for efficient markets but who's to argue with the concept of "systematic risk".
Me? I like the "sustainability" inherent in a 7.7% GDP number more than I would like the impact that hitting the 8% expected GDP number might have had on the policy-makers in Beijing. As they say in the story of the 3 bears... the porridge seemed "just right" to me... especially in the wake of that nice, 2.1% inflation rate they reported last week.
If there is anything that can relied on regarding Macau stocks it's an over reaction to negative press. Even as you note when the GDP number was for a quarter of good results in Macau already in the books. The Sterne Agee note did contain some comments about possible margin contraction in premium mass because of competition to offer cash rebates for play. And a little noise on smoking regulations.
Generally, I see no reason to look at this as anything other than a buying opportunity.
I think the markets reaction to the china GDP was initially seen in commodities in their huge sell offs, look at the hard metals, coal, steel names, etc. I think LVS just got drug down because of the china play.
You'll note that the biggest impact has been on VIP as China negotiated it's way through it's "soft landing", the nadir of which was 7.4% GDP growth in Q3. Mass market growth, which is Sand's strength, was barely impacted. Same with the crash of 2008... the worst that Macau's mass market did in the wake of that in 2009 was a +2% reading.
In 2009, as Las Vegas got totally destroyed, the short-drive tribal casinos in the U.S. actually did fine. When people are sucking it up during a severe recession, they cancel their trips, but they don't stop eating, drinking, smoking... and gambling locally.