China is finally starting to lift its lockdown protocols. According to Bloomberg, the country is now “reporting the lowest number of new cases since early February.” On top of that, the nation is reducing the required quarantine time for international travelers. This means that the Chinese economy is clear to start making up lost ground. For the companies that operate the country’s largest casinos and resorts, that means a significant bump. Casino stocks are rising on the news, including U.S. names.
Several of the largest U.S. casino companies have holdings in China. Today, these stocks are all enjoying a nice boost. MGM Resorts International (NYSE:MGM) is up less than 1%. Meanwhile, both Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN) have spiked by about 5%. Lastly, Hong Kong-based Melco Resorts & Entertainment (NASDAQ:MLCO) is up by more than 8%.
Casino stocks looked primed to rise even higher as the day continues. Here’s what investors should know.
Lockdown Easing Is a Win for Casino Stocks
Some U.S. gambling stocks have one surefire catalyst they can count on every year; the Super Bowl. Aside from that, the bumps they get can be quite random. One of the last times all four of the aforementioned casino stocks rose, the move was on a regulatory update for Macau. Like all tourism-centric companies, these casinos and hotel names also benefitted when the U.S. eased its own lockdowns.
It makes sense that this latest news is a win for Melco one of China’s leaders in the casino and hospitality space. For U.S. investors, though, it’s easy to forget that many of the companies that dominate Las Vegas also have significant holdings in China. MGM owns many popular resort hotels in the country. LVS and WYNN also operate properties in Macau.
Earlier this June, Las Vegas Sands CEO Robert Goldstein commented on the company’s China holdings, saying would not “take long” before Macau rebounded. It appears that this optimistic prediction was correct. Now, China’s casino industry seems to be headed for a turnaround. China’s reduced quarantine time for international travelers will mean a spike in tourism. And as another boon, the U.S. recently announced the end of its testing requirements for incoming travelers.
What Comes Next?
Assuming Covid-19 cases continue to stay low, casinos stocks are set to enjoy an excellent season. True, rising travel costs may compel some would-be tourists to stay home. But China should still see an influx of business for its hotels and casinos. While more tourism could easily mean more Covid-19 cases, the country’s economy now certainly has a chance to make up for lost time.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
