I haven’t written about the Macau casinos for some time, mostly because I haven’t had anything useful to say.  The fact that I’ve called this group horribly wrongly over the past year or so hasn’t encouraged me to make predictions, either.

I’ve traded around in the group (and, in the case of Wynn Macau and Sands China, their US parents, as well) but have kept my overall position size by and large intact.  Shows what I know.

It has seemed to me, wrongly, that all of the bad news about the casinos in Macau has been in the public domain for some time.  The anti-corruption campaign being waged by Beijing–that has made high rollers wary of exhibiting their wealth at the gaming tables–has been going on since 2013.  Restrictions on visitation rights from the mainland to Macau put in place last year have done the rest of the damage.

Both of these factors have been well-known for a long time.  Therefore, it has seemed to me, much/most of the potential damage had to already be factored into the prices of the stocks.

Wrong! The Macau casino stocks have been sold down again and again when the SAR’s gaming authority has announced each month the (highly predictable) year on year gambling revenue decline.  Figuring we were at the bottom six months ago as far as the stocks are concerned, as I did, has clearly been the wrong position to take.

As I’m writing this on Wednesday night, however, the stocks I pay particular attention to–Wynn Macau, Sands China and Galaxy Entertainment–are each up by more than 10%.

Why is this?

It’s because the mainland has rescinded the travel restrictions it inaugurated in 2014.  As far as visiting is concerned, we’re back to the older, more favorable rules.  This plus has been already reflected in US trading over the past two days, but only in overnight trading tonight in Hong Kong.

Are we at the bottom now?

For someone like me, who already has a significant position, this question has no action-related relevance.  And, as I’ve mentioned above, I’ve been wrong about these stocks for a considerable time.  Still, it’s hard to ignore a 10%-15% increase in stock prices.  Also, the second half of 2014 was the period when the Macau gambling market began a serious swoon. Therefore, year on year comparisons for the overall market should soon begin to improve.  We don’t need current results to get any better.  More than anything, the improving comparisons will be coming from deterioration in the base year, 2014.

So. yes, I think this is the bottom.

I also think that the upturn in the gambling market won’t be a rising tide that lifts all boats, was it has been in the past.  I think Wynn Macau, and to a lesser extent, Galaxy Entertainment, have the most to gain.