Macau gaming stocks experienced a collective downturn. At the time of writing, GALAXY ENT (00027) fell 3.3% to HK$35.8. WYNN MACAU (01128) dropped 2.88% to HK$5.39. MGM CHINA (02282) declined 2.48% to HK$12.18. MELCO INT'L DEV (00200) decreased 1.31% to HK$3.76.

A recent research report from Morgan Stanley indicates that Macau gaming stocks are expected to underperform the broader market in the near term. The firm forecasts Macau's gross gaming revenue to grow by 6% this year, with EBITDA increasing by only 2%, figures that are below market expectations and represent a year-on-year weakening.

Growth is projected to slow in the second half of the year due to base effects impacting gaming revenue, coupled with persistently weak mass-market table performance. Additionally, rising promotional expenses and ongoing non-gaming investments are pressuring margins. Due to the sector's focus on the premium mass segment, cost pressures, particularly from reinvestment requirements, are seen as structural. Downward revisions to market earnings forecasts are expected to put pressure on this year's EBITDA projections.

The institution anticipates that gaming revenue growth will begin to slow on a year-on-year basis starting in May, with the second and third quarters likely to record negative EBITDA growth.