EJFQ Market Analysis | Selling pressure diminishes, valuation remains low, and gambling stocks are overhyped

After global markets weathered the turbulent 3rd month, the Iran conflict’s “full moon” phase showed signs of easing into a ceasefire, Wall Street stocks “snatched the last prize” in March. On Tuesday (March 31), the Dow surged by more than 1,000 points; the S&P 500 and the Nasdaq also rose by 2.9% and 3.8%, respectively. Asian stocks rallied sharply to kick off April: the Hang Seng opened up by 569 points, moving back above the 25,000 level and the 250-day line. It closed at 25,294 points, up 505 points, sweeping away the sluggish momentum from the first quarter turning from gains to losses.

Data from the EJFQ system shows that shares worth over 2 billion were up by a ratio of about 85% yesterday. The rally was fairly broad; there were also 42 stocks with gains of more than 10%. Among them, MGM China (00200) announced a turnaround to profit in 2025, with its share price jumping 15.2%. The rest of Macau gaming stocks also performed well, driven by Macau’s gaming revenue exceeding expectations.

Macau’s gaming revenue in March was 22.612 billion Macau patacas, up 8.9% from February, and up 15% year-on-year. It marks the 13th consecutive month of growth. Although the figure is the third-highest monthly level since the COVID-19 pandemic, it still falls short of the roughly 30 billion Macau patacas per month average in 2013 and 2014. With macroeconomic conditions and consumption momentum in China—the main source of customers—no longer what they used to be, Macau gaming revenue may lack the conditions to break new highs for now. While the sector’s long-term value will still need to be watched, it is nevertheless appealing from a short-term perspective.

April 2, 2025 is the “Liberation Day” that U.S. President Trump mentioned. Last year on this day, it was announced that retaliatory tariffs would be imposed on trade partners, which dragged down the “stocks, funds, and bonds triple kill” in the U.S., triggering a global selloff. Subsequently, TACO (Trump Always Chicken Out) saw all kinds of assets launch an immediate strong rebound. By the fourth quarter, things began to diverge, with gold and other precious metals among the most notable. Hong Kong stocks then entered a sideways pattern, mainly fluctuating between 25,500 and 27,500. During the period, they even surged above the 28,000 level, though only briefly. Different sectors started to return to fundamentals as the main driver, with strengths and weaknesses appearing side by side.

Macau gaming stocks are a weak group, as shown in the 【圖】. After the five listed companies holding Macau gaming licenses were fueled by ecstatic trading following the “tariff floor,” from the fourth quarter of last year they repeatedly moved lower, underperforming the Hang Seng Index. The biggest drop ranged from about 20% to 40%. And in March, all of them refreshed their new lows for 2026. Even MGM (00880) came close to last year’s low; it is estimated that the selling pressure has been digested, completing consolidation and waiting for positive news to spark the next move.

After Macau gaming stocks peaked in 2013 or 2014, except for Sands China (00027) and Wynn Macau (01928), which saw declines of up to roughly 80%, the rest all plunged more than 90%. Currently, share prices are still 60% to 90% lower than those highs. Compared with gaming industry revenue at around 70% of its peak, even after considering the bubble component, the current price clearly does not look overvalued. In fact, according to EJFQ.com FA+ data, all 6 stocks are below the forecast median on a price-to-sales basis, meaning valuations are still relatively cheap.

On the other hand, Macau gaming stocks’ average month-on-month trading range over the past 13 years indicates that April is a “strong month” for the whole year. Part of the reason is that the relatively light seasonal calendar in the first quarter provides room for rebound. It is also believed to be related to investors entering early ahead of the May Golden Week peak travel season. With valuations staying low, expectations that this year will also benefit from this seasonal factor are reasonable—so it can be viewed as a short-term target.

Oriental Daily News Investment Research Department

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