Most companies in Macau are closed due to the COVID outbreak, while casinos remain open

After scores of locally transmitted cases were identified over the weekend, Macau’s largest gaming hub began its second day of mass COVID-19 testing on Monday, with most businesses closed but casinos remained open.

The testing of Macau’s 600,000 citizens is set to cease on Tuesday, as the Chinese-run former Portuguese colony follows China’s “zero COVID” policy, which aims to eradicate all outbreaks at whatever cost.

Most residents have been asked to stay at home, restaurants have been closed for dine-in business, and border restrictions have been strengthened, implying that casino revenue will be close to nothing for at least a week, if not longer, according to analysts.

On Monday morning, shares of Macau casinos fell, headed by Sands China 1928. Hong Kong is leading the collapse, with a drop of nearly 8%, the most since March 15.

MGM China, Wynn Macau, Galaxy Entertainment, Melco, and SJM Holdings all saw their stock prices decline by 4% to 7%.

The government of Macau depends on casinos for almost 80% of its revenue, with the gaming industry employing the majority of the people directly or indirectly.

Macau’s chief executive, Ho Iat Seng, said in a statement on the government’s website that the latest outbreak came out of nowhere and has been spreading swiftly, with the source still unclear.

The previous coronavirus epidemic in Macau occurred in October of last year. This year, an outbreak in the Chinese region of Hong Kong resulted in over 1 million confirmed infections and over 9,000 deaths, wreaking havoc on hospitals and public services.

While the number of daily cases in Hong Kong has risen to over 1000 in the last week, officials have stated that they are unlikely to tighten limits further because the burden on medical services has not increased.

Macau has only one public hospital, which is already overburdened on a daily basis. The territory’s hasty intention to test its whole population comes while it maintains an open border with mainland China, with many citizens living and working in Zhuhai.

China, on the other hand, has not opened its borders to Hong Kong, leaving the financial center cut off from the rest of the country and the rest of the globe.

Macau’s government is expected to approve a revised gaming law this week, laying the basis for what multibillion-dollar casino operators would be needed to do in order to continue operating.

“Depending on how soon Macau is able to contain the latest outbreak, there is a danger that the gaming legislation modifications and following concession tender process would be delayed,” said Vitaly Umansky, a Sanford C Bernstein analyst.