Photo by Kaysha on Unsplash 

The world's largest gambling hub, Macau, will shutter almost all casinos and non-essential businesses for a week from Monday on as an outbreak of COVID-19 spreads across the autonomous region on the south coast of China.

AFP quotes Macau's top city official, Andre Cheong, who, in a press conference on Saturday, said the gambling hub would enter "static management" between July 11-18, during which casinos will be closed. Only essential businesses like supermarkets, gas stations, and pharmacies will remain open.

The measure comes as Macau reported 71 new COVID-19 infections on Saturday. A total of 1,374 infections have been recorded since June 18 -- a low number, though high enough for the city to implement mainland China's strict Zero-Covid policy.  

Last week, authorities closed Macau's most popular casino, the Grand Lisboa, after 13 infections were reported at the casino/resort complex. 

Macau is the largest casino hub in the world and trumps Las Vegas. More than half the city's GDP is derived from the gambling industry, and casinos employ 20% of the population. The curb will deal a hard blow to the town because of the economic impact of enforcing harsh lockdowns and mass testing. 

The Zero-Covid policies (especially locking down Shanghai for two months) have triggered an economic slowdown in the world's second-largest economy after President Xi Jinping made clear weeks ago that the policies aren't going anywhere. Probabilities are waning that Beijing's 2022 growth target of 5.5% can be achieved because of the lingering threat of new lockdowns.

Last week, Bloomberg reported Beijing has opted to unleash a massive 1.5 trillion yuan ($220 billion) of "special" local bonds in the second half of the year for infrastructure spending to offset the downturn. 

And how will Macau gaming stocks react to the news this weekend? Well, we suspect very negatively following an index of casino stocks in the town has failed to find support around a 2015/16 low, which points to more downside. 

US casino companies operating in Macau are Wynn Macau Ltd, Sands China Ltd, and MGM China Holdings Ltd, which will likely see lower shares on the news come Monday. 

"Beyond the virus, the casino industry's facing other challenges, including a new law that significantly increases government control over operations and Beijing's crackdown on high-rolling gamblers to curb capital outflow," Bloomberg adds. Is the lockdown more about COVID-19, or ratcheting down on capital outflows?

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