Donald Trump's insistence on China stabilizing its currency could be a net benefit for gaming industry investors. If China does stop artificially devaluing the yuan, Macau could see even more tourists visiting the Chinese gaming hub, Union Gaming analyst John Decree told TheStreet in an interview.
For months President-elect Trump has signaled to voters that he plans to "get tough" on China, describing the U.S. trade deficit with the country as untenable. Trump's campaign platform has pledged to instruct his Treasury Secretary to label China as a currency manipulator and bring trade cases against the country.
While his rhetoric appealed to Trump supporters, the concern is that that kind of talk could have dire consequences for companies at home that depend on China for growth.
Decree ultimately believes that a Trump presidency will be a net neutral event for the Western gaming industry's relationship with the Chinese government: "Generally the relationship between the gaming industry and Macau is pretty insulated from China's broader market, so even if there are escalating tensions, the casinos in the region probably won't be affected."
The Macau gaming region is the lone gambling hub in a country of 1.5 billion people, and American gaming companies have invested heavily in the region amid declining revenues at home. However, the region has struggled over the last two years, posting 26 consecutive months of revenue declines. Those declines have turned around in recent months as Macau reported three consecutive quarters of revenue growth.
On Monday, TheStreet reached out to a number of gaming companies ahead of Tuesday's presidential election to find out who their CEO's were supporting. Las Vegas Sands and MGM Resorts (MGM) pointed to public comments their CEO's have made in the run up to the election.
MGM CEO Jim Murren threw his support behind Hillary Clinton earlier this summer despite being a lifelong Republican, saying his voice was needed to combat the "accumulation of vitriol" he saw in the Trump campaign.
Las Vegas Sands CEO Sheldon Adelson threw his support behind Trump, pouring an estimated $25 million into a pro-Trump Super Pac. However, while Adelson did pen an effusive op-ed in the Washington Post endorsing Trump, his support for the candidate waned as the election season dragged on and Trump committed several political gaffes. Adelson originally had pledged $100 million to Trump's campaign.
Macau continues to be an important part of the gaming industry's ecosystem and that importance will only grow in the coming quarters as the region matures. Trump's foreign policy will be a net neutral for gaming investors at the worst, and a boon for the industry if China ends the devaluation of its currency.