JP Morgan Securities says it is “somewhat disappointed” by a Monday announcement that Hong Kong would need to have another 14 days with no Covid-19 infection before Macau would consider lifting its 14 day quarantine for inbound visitors coming via Hong Kong.

“We couldn’t help but be somewhat disappointed by the seemingly limited scale – at least initially – of the travel bubble plan, as well as the slower-than-expected timing of launch,” wrote JP Morgan analysts DS Kim, Derek Choi and Livy Lyu.

JP Morgan reduced its full year Macau GGR estimate by 5% points, to be 42% of 2019’s GGR, with a 51% and 26% recovery respectively, relative to 2019, in the mass market and VIP segments.

According to data from Macau regulator, total 2019 GGR was MOP 292.46 billion , around US$ 36.6 billion.

“Not only is Hong Kong the second-largest feeder market to Macau: 15% to 20% of visitors and perhaps approximately 10% of gross gaming revenue,” in normal trading times, but also, “Hong Kong’s importance lies in its position as a key channel for traveller and capital flows from the mainland, in our view,” said the analysts.

The latest announcement “lessens the prospect of a strong uptick” in Macau GGR “in July and possibly even August, leading us to curb our enthusiasm for the summer holiday” trading outlook, added JP Morgan.

JP Morgan now expects third-quarter and fourth-quarter GGR to reach respectively 43% and 58% of pre-Covid-19 levels, versus its previous forecast of 50% and 66% respectively.

JP Morgan said it was now assuming that what it termed a Hong Kong-Macau-mainland China travel bubble “would be gradually rolled out in the next two to three months, followed by China exit visa “normalization,” including a resumption of electronic issuance of IVS permits for independent travelers from the mainland, “during the fourth quarter”.

Mainland China is currently the only place to have a largely quarantine-free travel bubble with Macau.

Editing by Rachel Hu