Countries hosting the World Cup enjoy a boost to economic growth and stockmarket performance not experienced by winners, according to Société Générale.
Ahead of this summer’s tournament in South Africa, the French bank has put together a note advising investors on the gains and pitfalls to be had from the contest.
It recommends going long the JSE South Africa index and short the Brazil Bovespa to strike the optimum balance between risk and reward. An alternative pairs trade is long the JSE and short the Argentina Merval, Société Générale said.
Analysts went on to compile a list of 16 consumer-facing stocks which have performed well ahead of the competition in the past. Heineken, Next and Nestlé were among the shares powering the makeshift index to outperform the Dow Jones Stoxx 600 by 13.6 per cent in the period around the five World Cups between 1990 and 2006.
“Few doubt the World Cup’s effect on merchandising deals and television rights,” the note added. “British brewers and advertising agencies usually perform well.”