With a helping hand from Macau, the world’s largest gambling hub, the VanEck Vectors Gaming ETF (NYSEArca: BJK) is up more than 19% this year and some analysts see more upside coming for gaming stocks.
Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN) are dominant names in Las Vegas but the companies, two marquee holdings in BJK, are also big players in Macau, levering each to Chinese gambling trends.
“Casino stocks surged Thursday after better-than-expected revenue numbers out of Macau, a special administrative region of China that’s become a gambling mecca. And some strategists say it isn’t time for investors to cash in their chips just yet,” reports CNBC. “Las Vegas Sands is now up 16 percent year to date, MGM Resorts has risen 12 percent and Wynn Resorts has climbed 54 percent. In fact, Wynn is the third-best-performing stock in the S&P 500 this year. On Thursday, Las Vegas Sands saw its biggest rise since the first day of September.”
Some industry analysts see opportunity with Macau stocks. Macau is the only Chinese territory where gambling is legal. The city is trying to rebuild its market with shops, restaurants, entertainment shows and other non-gaming attractions to bring in more middle-class tourism.
BJK follows the MVIS Global Gaming Index, “which is intended to track the overall performance of companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment,” according to VanEck.
BJK, which debuted in early 2008, holds 40 stocks. U.S. companies represent less than 37% of the ETF’s weight while Australia and China combine for about 27%. Overall, 15 countries are represented in BJK, the lone dedicated gambling ETF.
“The second quarter is “off to an encouraging start for Macau’s gaming operators,” Stifel Nicolaus analyst Steven Wieczynski wrote in a Thursday note to clients. “Although we sense a resurgence in VIP play continues to support reported marketwide statistics, we believe the mass market growth story continues to unfold according to plan as well, as supported by marketwide visitation and lodging metric data,” reports CNBC.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.