Football and stock market? Winning combination, especially on the occasion of the World Cup. This is certified by an analysis by Goldman Sachs according to which from the 1974 edition to that of 2010 (except those of 1978 and 1986, won by Argentina, for which data is lacking), the country that lifted the Cup – and sometimes even the country that hosted the event – has consistently had excellent, albeit only in the short term, feedback on the financial markets. An average of +3,5% in the month immediately following the event, even if in many cases dissolved within just three months. And on the contrary, for obvious reasons, the disappointment for the most searing defeat has often penalized the stock market performance of the country beaten in the final.
Only one exception appears in the Goldman Sachs graph: Brazil in 2002. In that case, not even the feats of Ronaldo (who was top scorer and later won the Ballon d'Or) and his companions could compensate for the macroeconomic events of that period: the profound recession and the currency crisis led the São Paulo Stock Exchange, which had already lost 13% in the month before the World Cup, to lose 19% in the following 30 days and 25,5% considering the post-Cup quarter.
However, Brazil, the most successful national football team in the world and South America's economic locomotive, was also the protagonist of the most marked mundial boom: in 1994, when it won in the final against Italy, it influenced the MSCI World index by more than 21%. and went close to +40% in the following quarter. Italy instead, it will be a coincidence, recorded a -8,5% in that summer. Just as in May 1982 Piazza Affari lost 7,2%, which after the mundial triumph in Madrid became a resounding +9,5%, albeit immediately deflated to -11,1% over the three months.
The reaction of the markets on the occasion of the victory in Berlin in 2006 was much more contained: the Milan Stock Exchange was flat the month before (-0,7%) and remained flat, barely gaining positive territory with +0,5%, confirmed also on a quarterly basis. In the time period considered, two other nations have won two World Cups: one is Germany, which was also the host country in 1974. In those years the German markets were already traveling well, but the feats of Muller and his companions were in any case a boost, and the only one - in the 40 years taken into consideration by Goldman Sachs - to maintain themselves in the long term: in fact, in the year following the World , Frankfurt gained almost 22%. On the other hand, the performance was more sober in 1990, when indeed the markets slowed down slightly while remaining solidly positive.
The other two-champion team is Argentina, on which instead nothing is known about when it won, but it represents the only exception of a country which, despite the defeat in the final, travels well on the stock exchange: precisely the final in Rome in 90, which it hurt Maradona and his companions so much, instead it left the share movements indifferent, which taken by the bubble gained 33% in the following month and almost 70% in the 12 months after the World Cup.
The last edition of the Cup was won by Spain, whose performance best represents the general trend: in the quarter preceding the South African expedition in 2010, the Madrid Stock Exchange lost 8%; in the following quarter it earned 4,5%; in the following year, once the very brief Mundial effect was definitively dissolved, it again lost 14,7%. Time to cheer, in short, and then the markets - as is normal - return to reality.
As far as the host countries are concerned, however, as mentioned, the only one to record a significant stock market performance was Germany in 1974. But on that occasion it also won the final victory. So Brazil shouldn't be deceived: the only credible goal in the eyes of the markets is the combination of organization and final victory. Meanwhile, the Bovespa di San Paolo index, which at the beginning of the tournament had risen above 55 points (to its highest level since mid-October 2013), is now just over 53 and has lost 2% in the last five days alone. Always better than the Ftse Mib, which coincidentally has been in constant decline for 7 consecutive days since Italy was eliminated by Uruguay.
Goldman Sachs analysis
