Neighbouring city Zhuhai will be the first mainland Chinese city to be issued with tourist visas beginning on Wednesday, the Macau government announced late on Monday, in what Jefferies called “a big step” in what is expected to be a phased-in return of the tourist and group visas.

Macau’s secretary for Social Affairs and Culture said the city is working with mainland authorities to resume the full visa programme, but warned the plan could be disrupted if virus transmissions return. The former Portuguese colony is the only place in China where casino gambling is permitted.

“This is significant, as [Individual Visit Scheme] and group tours accounted for 47 per cent and 23 per cent of total mainland arrivals to Macau and are the key driver of [gross gaming revenue],” wrote Jefferies analyst Andrew Lee.

“Guangdong accounted for 46 per cent of total mainland arrivals to Macau with 73 per cent of Guangdong arrivals entering Macau via IVS. We believe this is the next step of the phased and gradual recovery, as we expect IVS will be relaxed for other cities within Guangdong next, followed by other cities and provinces across China,” wrote Lee, whose favourite pick among casinos is Sands China.

The coronavirus has roiled Macau casino operators, who have poured billions into creating a new glittering play land on the Cotai strip for gamblers and their families, with reproductions of Venice’s canals, complete with gondolier rides, giant spinning electric diamonds and cable cars that stretch across a gigantic dragon fountain with glowing red eyes.

Macau casinos reopen to sparse crowds as punters hedge bets

Galaxy Entertainment is in an especially strong position, contends Bloomberg senior analyst Angela Hanlee.

“Galaxy Macau’s broad market positioning allows it to switch between focusing on VIP clients during upswings and a more defensive, mass-gaming approach during downturns, making it the best-positioned operator to capitalise on any Macau tourism recovery. A market-share grab at rivals’ expense could come on property upgrades and amenities,” she wrote in a new note.

The resumption of visas will not have a big impact immediately on gaming revenue in August, said Daiwa Capital Markets analysts Andrew Chung and Terry Ng, adding they expect it to continue to be down 90 per cent.

“We expect the entire Guangdong province to be next in line to resume IVS, and then followed by provinces without new confirmed cases. We note that 14 out of the 19 provinces with IVS eligible cities have not had new confirmed cases,” they wrote.