HK Stock Market Move | Gaming stocks fall across the board; Citi maintains forecast of a 5% decline in October gaming revenue; JP Morgan says earnings estimate cuts may exceed expectations

Gaming stocks fall across the board. As of press time, MELCO INT'L DEV (00200) is down 4.74% at HK$2.41; Sands China (01928) is down 4.49% at HK$10.86; GALAXY ENT (00027) is down 4.24% at HK$31.6; SJM HOLDINGS (00880) is down 3.72% at HK$1.165. Citi estimates that Macau's gaming revenue for the first 19 days of October was about MOP14.1 billion, with average daily gaming revenue from October 12 to 19 at about MOP613 million, 16% lower than the roughly MOP729 million daily average in the week of October 5. The bank maintains its October gaming revenue forecast of MOP23 billion, implying a 5% year-on-year decline. JP Morgan said that cheap valuation alone is not enough. Market consensus figures may still be further cut in line with the bank's estimates. Earnings downgrades should not come as a surprise, as most people had already expected cuts, but based on recent trends, the magnitude of the cuts appears significantly larger than most expected, and management's third-quarter commentary is expected to be subdued, which may further weigh on sentiment. With no clear re-rating catalyst in sight, the bank maintains a cautious and selective stance on the sector.