Singapore gaming market almost inflation-proof:Moody's

The current inflationary environment with strong economic growth will not adversely affect gaming operators in Macau, Singapore, and Malaysia.

According to Moody's, gaming revenues in Macau and Singapore, the region's two largest gaming markets, have grown rapidly in the past few months, driven mainly by strong economic growth and ample market liquidity.

However, any economic downturn would hurt the performance of these operators, with the degree of impact varying by country. Those in Macau and Singapore could suffer more than their Malaysian counterpart, which held up well during the Asian financial crisis of the late 1990s and the more recent recession of 2008-2009.

VIP customers from Mainland China, playing on credit extended by junket operators, dominate Macau’s gaming market. If higher inflation and policymakers’ reactions precipitated an economic slowdown in China and tightened market liquidity, the willingness and ability of junkets to extend credit would decline and so too would gaming revenues. Similarly, such a slowdown would hit revenues and profits in Singapore’s gaming market, which relies on business travelers and tourists.

By contrast, Malaysia’s Genting is well positioned to weather a slowdown because of its more balanced operations. For instance, its stable operation in Malaysia could partly mitigate the negative impact of a weakening in its operation in Singapore, and the firm has a strong capital structure and liquidity.