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Macau casino revenue extended its plunge to a second year in June, declining 36.2% to 17.36 billion Macau patacas (MOP; US$2.17 billion), down. This thirteenth consecutive year on year decline in monthly gaming revenue slightly beat consensus forecasts of a 38.7% fall, but was Macau’s lowest gaming revenue total since November 2010. For the second quarter of 2015 gaming revenue fell 37.4% and for the year, it’s down a flat 37%.

If you’re looking on the bright side, Union Gaming Research notes that the “cadence” of revenue declines improved modestly in the quarter from 38.8% in April to 37.1% in May to 36.2% in June. From early action, Wells Fargo Wells Fargo says the trend will hold for July, projecting a decline of about 30%.

Perhaps more important, on July 1 Macau announced revisions to the transit visa policy, essentially reversing the changes put in place a year ago. Mainland visitors can again stay for up to seven days en route to a foreign destination and for two days on the return leg. Union Gaming says the change is positive not only because of the possibility of additional visitors, particularly in the VIP and premium mass categories, but because it indicates a measure of support, rather than antipathy, for Macau from Beijing, even as President Xi Jinping’s anti-corruption campaign continues. Moreover, Wells Fargo warns the mainland economy still constitutes a “headwind” for Macau.

The late May opening of Galaxy Macau’s Phase 2 helped it win market share in June, but didn’t expand the Macau market overall. (Photo credit: Philippe Lopez/AFP/Getty Images)

Credit Suisse, which detected “green shoots” of recovery in May, says any transit visa benefit will be gradual. Analysts Kenneth Fong and Isis Wong didn’t expect flowering of the green shoots during June, and there was none to be seen. VIP roll and mass revenue were each off more than in May. The late May opening of Galaxy Macau Phase 2 and Broadway Macau helped Galaxy Entertainment Galaxy Entertainment Group gain market share but didn’t drive revenue or visitation growth for Macau overall.

Credit Suisse believes June likely constituted a revenue bottom but doesn’t think it’s time to fish, particularly with the bump in share prices from the transit visa changes. They suggest investors wait until late this month or early August to see how the sector performs. Investors should also watch recent volatility on the Hong Kong stock market following carnage in China markets – where some observers believe mainland high rollers have exercised their betting urges as a substitute for trips to Macau.

Morgan Stanley Morgan Stanley’s Praveen Choudhary was among the least bullish analysts at G2E Asia in May; throughout June and into July, Morgan has amped up its “cautious” outlook. After a visit to Macau in June, Morgan warned of growing premium mass and junket liquidity issues, price cuts on hotel rooms and table minimums to attract and hold lower-end customers, earnings challenges as new properties come on line and have to expense, rather than capitalize, interest costs as well as recognize depreciation. (Bloomberry, operator of Solaire in Manila, saw its first quarter earnings tumble for precisely that reason, after opening its Sky Tower.)

Subsequently reports have warned about excess investor optimism regarding relaxation of the transit visa rules and excessive focus on weekly trends. Morgan Stanley sees continuing falls in gaming revenue, earnings and regulatory risk. Last week, the bank reduced its estimates on gaming revenue for 2015, 2016 and 2017 to -34%, -2% and 6%, while cutting Macau property Ebitda forecasts to -38%, +2% and +12%. “Although our EBITDA/EPS estimates are 18-36% below consensus for 2015/16, we still see risk of further earnings estimate downgrades,” the report by Choudhary and fellow analysts Alex Poon and Thomas Allen stated.

Morgan Stanley downgraded Sands China, controlled by Sheldon Adelson’s Las Vegas Sands, and MGM China from even-weight to underweight. Those are precisely the two stocks that Credit Suisse suggests investors add on downturns. In Macau right now, it’s hard for anyone to know what to do.

Hong Kong On Air author Muhammad Cohen is Editor At Large for Inside Asian Gaming. Follow him on Twitter @Muhammad Cohen.