HK Stock Market Move | Gambling stocks collectively trended lower. Morgan Stanley expects the sector to underperform the overall market in the short term. Gambling revenue in the second half of the year will be affected by base effects.

The gambling stocks collectively fell, as of press time, GALAXY ENT (00027) fell by 3.3% to 35.8 Hong Kong dollars; WYNN MACAU (01128) fell by 2.88% to 5.39 Hong Kong dollars; MGM CHINA (02282) fell by 2.48% to 12.18 Hong Kong dollars; MELCO INT'L DEV (00200) fell by 1.31% to 3.76 Hong Kong dollars. Morgan Stanley's latest research report pointed out that it is expected that in the short term Macau gambling stocks will underperform the overall market, with Macau gambling revenue expected to grow by 6% this year, while EBITDA is only expected to grow by 2%, lower than market expectations and weakening year-on-year. Due to the base effect affecting gambling revenue in the second half of the year, growth will slow down, and the overall market conditions will remain weak. In addition, industry promotional levels are rising, along with non-gambling expenditures. Cost pressures, especially in reinvestment, are considered structural due to a focus on the high-end market. Market profit forecast downgrades will bring pressure to this year's EBITDA forecasts. The bank expects that gambling revenue will slow down year-on-year starting in May, and the second and third quarters will even see negative EBITDA growth.