Brazil is set to reap a 25 per cent stock market boost from hosting this year’s Olympics in Rio de Janeiro, if the experience of past hosts is anything to go by.
One year after organising the games, the last six host countries of Spain, the US, Australia, Greece, China and the UK registered an average increase of 25 per cent in their local stock markets, according to figures from AJ Bell.
The US, which hosted the Atlanta games in 1996, and Greece, which hosted the Athens Olympics in 2004, had both experienced a more than 45 per cent uplift in their stock markets a year after the event.
The 1992 Barcelona Olympics drove Spain's stock exchange up more than 27 per cent, 25 per cent in China after the 2008 Beijing Olympics and 16.5 per cent in the UK after London 2012.
The exception to this rule was Australia, where the stock market fell almost seven per cent after the 2000 Sydney games.
Four years after the games, stock markets in the last six organising states were up an average of 38.9 per cent, suggesting there is a long-term national benefit to be gained from hosting the event.
“While other factors will affect the markets, it seems that hosting the Olympics can provide a boost to the local economy which underpins each stock market,” Russ Mould, investment director at AJ Bell, said.
The Bovespa index in Brazil has lately been hobbled by commodity price weakness and a deep recession, while sticky inflation has forced the local central bank to jack up interest rates to a nine-year high of 14.25 per cent. The South American market has also been hit by political turmoil and the impeachment of President Dilma Rousseff.
However, cities across the globe still battle for the right to host prestige sporting events, since it is unlikely no benefit at all will accrue.
The benefits can run from improved infrastructure to less tangible results such as national esteem, better results on the pitch and the international focus they bring, as well as a boost to tourism during and after the competition in question.