Although September was better than expected for casinos in Macau, Jefferies Equity Research analyst David Katz isn’t buying a recovery narrative so far. In an October 1 investor note, he wrote that his expectations for the casino enclave remain the same.

Regarding new cuts in China’s interest rate and other economic measures announced by the Beijing government, Katz wrote, “The recently announced stimulus has drawn an outsized reaction but is still in its early stages and may not affect volume levels in the near-term.”

He added that Golden Week, much anticipated in Macau and on Wall Street, “was not setting up positively,” resetting the bar of expectations lower. Katz summarized that the September grosses were only a modest positive factor for the six Macanese operators.

September saw Macau’s casinos gross $2.1 billion, for year-over-year growth of 15.5 percent. Projections had been for $2 billion in revenue.

Katz didn’t think that pre-COVID levels of play were achievable, given the attenuation of the high-roller segment. But he did feel that the Chinese economic-stimulus policy will put wind in the sails of Golden Week, “as weak China macro is driving low player demand” for the holidays.

In an effort to regain five percent annual economic growth, Beijing has increased the amount of liquidity required of Chinese banks and lowered the main interest rate. Katz viewed this as a positive for Macau.

“Furthermore, we anticipate that as player demand improves, driven by less expectation for deterioration in economic conditions, the promotional environment could potentially return to normal levels over time,” Katz wrote. “Although the news is positive, we remain measured on gaming stocks in Macau as the economic recovery is in its early stages.”

Even so, he expected the larger economic malaise to cloud stock valuations in the near term. The same, he felt, could be said of heightened promotional warfare between the Macanese casino concessionaires.