Considering May and June have always been the off season for Macau's gaming sector historically together with the negative headwind from the World Cup in Russia, Macau's gross gambling revenue (GGR) rose by 12.5% year-on-year in June to MOP22.5 billion which is below consensus. Amid the intensifying trade war and devaluation of Yuan which may lead to actions from the Chinese government in an effort to control the flow of currency out of China, Macau's gaming stocks have been underperforming since last month. With the ending of gambling off season and Russia World Cup, a strong summer ahead is expected. Previous data also shows that Macau’s GGR tend to rally significantly after World Cup's quarter final. The soon-to-be-open Hong Kong-Zhuhai-Macao Bridge and Guangzhou–Zhuhai intercity railway will slash travel time between Macau and other cities in China. Also, the opening of luxury hotels such as Morpheus and Lisboa Palace will make Macau even more attractive for tourism. The tourism industry in Macau would be boosted and lead to a rise of Macau gaming revenues. Macau gaming stock price have a strong correlation with the result of GGR. The recent sell off due to seasonality of the gaming industry has led to an attractive valuation across the sector. We believe stock price of gaming stock will rebound along with Macau's GGR.

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