Wednesday, January 8, 2014

The historical relationship between FIFA World Cup and stock market performance

The 2014 FIFA World Cup soccer tournament will take place in Brazil from 12 June until 13 July 2014. Have you wonder what will be its immediate impact to the stock market before, during, and after the tournament?

Based on historical charts of Dow Jones and KLCI from 1990 until today, I have summarized the stock market performance in US and Malaysia during the years with FIFA World Cup, for the short period of early May to end July. The FIFA World Cup normally held in summer of northern hemisphere (around June) and last for about a month.

Here is the summarized chart (click to enlarge):

Based on historical stock market performance, in the US market, there is equal chance to be sideline (yellow box), trending up (green box), or trending down (red box) before and during the FIFA World Cup tournament. After the tournament, it is very likely to go down. Historically from 1990-2010, only 2006 US market goes up after the tournament.

For the Malaysian stock market, it has high chance of going down before the tournament, sideline during the tournament, and going up after the tournament.

These are the considerations during the FIFA time which might affect the stock market performance:

  • Retail participants in stock market might allocate their time and money to football gambling, therefore temporary gone out of the stock market.
  • In Malaysia, as FIFA held in western host country happens at mid-night, the market participants who watch the matches during mid-night might be sleeping during market opening time, or not having enough concentration to the market.
  • The FIFA news will overwhelm other news, including industry and business news.
So, what will happen to the stock market this year around FIFA time? Let's wait and see.


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