One of the other things that McFadden said yesterday, which led to a Reuters report, was that SJM expects a softening of VIP revenues in the second half of the year. His logic is unassailable: as property prices freeze or fall, so VIP gamblers will cut back on their bankrolls out of uncertainty about their net worth.

We are going to stick to our guns on this one, however. For now. Until we see clear evidence of a fall in property prices on the mainland (they rose 12 per cent in May, by the way), we are going to say that demand will remain vigorous in the second half, and gross gaming revenues will continue to climb strongly year-on-year. June has certainly seen no slowdown, with revenues in the first week up 70 per cent year-on-year. Karen Tang of Deutsche Bank is on message, too: she released a report this morning saying she thinks significant upgrading of target prices is required by “the street”, and she herself expects 50 per cent year-on-year growth in gaming revenues for 2010.

We still think the MOP20 billion-a-month mark will be broken by October. Why? Because uncertainty about government regulations governing the property market is not the same as uncertainty about net worth. We believe that the high-rollers and capital-flighters driving current demand see Macau as the best place to be parking their money until Beijing starts issuing clearer directives on what it wants to see happen to asset prices on the mainland. And with Europe in the toilet, do we really expect Beijing to be austere for the foreseeable future? So the junkets will continue to be awash in working capital, credit will be plentiful, and the sun will continue to shine in Macau. Stay tuned.

Used with permission and copyright to IntelMacau.com