Which Markets Will Benefit From The Rugby World Cup?
As any investor knows, the stock market is a volatile area where prices can surge and plummet quickly for myriad reasons. One thing is certain, though – share prices are highly susceptible to outside events. Some of these (such as a military coup, an earthquake or a snap election) come from nowhere, and can have a profound impact on markets where confidence in the nation’s economy is paramount, such as the Forex.
Other big events are known about in advance and this is where research can pay dividends. Major global sporting tournaments such as this year’s Rugby World Cup definitely come into this category, and keeping informed about the companies whose fortunes could be affected by them can prove very profitable.
World Cups, the Olympics and other big sporting tournaments have a clear relevance to investors in that they are all offer major sponsorship opportunities, and the fortunes of such sponsors could be considered a fairly safe bet. For example, it would be hard not to imagine a boost in the shares price of Heineken, the Rugby World Cup’s big beer sponsor. The brewing giant has already enjoyed 12% Earnings per Share (EPS) growth in 2015.
Another of the RWC’s official sponsors, Coca-Cola, saw its share price rise impressively from its sponsorship of 2014’s FIFA World Cup in Brazil, so buying Coca-Cola shares could also be a relatively safe investment.
However it’s not just sponsors’ stock whose market price is affected by a big sporting event. The savvy investor will think carefully about the likely benefits to key companies in the host country. It’s worth looking at this when a major tournament is in the planning stage, so that you can buy when the price is lower. However badly English fans may be feeling about their team’s early bath, there’s no doubt that the UK’s travel, hospitality and tourism industries will have had a fillip from the almost half a million visiting rugby fans. ITV, who won the TV rights, are also thought likely to do well by market experts.
Sporting events don’t just affect sponsors and individual companies. The joy of victory or the collective gloom of an early exit not only have a huge impact on sports fans but also on the highly volatile stock-market. The FTSE had a major rally when England last won a World Cup in 2003, and while the host nation has already said goodbye to the chance of bringing home the trophy in 2015, market-watchers in the remaining nations can hope for an economic boost to accompany the surge of national pride.
While nothing’s certain in sport or stock markets, successful investors have several things in common with elite athletes – an appreciation of the need for preparation and a cool head, to name two. With fate of the World Cup being decided at the end of October, no-one can say who will leave Twickenham victorious, or which company will gather the laurels off the pitch. One thing is certain, however – fortunes, as well trophies, are there for the taking.