Olympics push bourses higher

ISTANBUL

UK’s Andy Murray poses with his gold medal after wining the final game against Roger Federer. The Olympic Games might give a boost to London Stock Exchange, a study claims. Abacapress photo

The Olympic Games has a positive effect on bourses in countries that host them, according to a new report by Deloitte, a leading professional services firm in the audit, advisory, tax, institutional finance and risk-analysis fields.

Host countries’ stock exchanges have outperformed major international exchanges in the six months after every Olympic and Paralympic Games since 1984, the report said, according to a statement from the business advisory firm.

After the Los Angeles Games in 1984, the Standard & Poor’s (S&P) 500 rose 5 percent more quickly than the average of seven leading international exchanges.

The S&P 500 index gained more than 20 percent while the average of other major stock exchanges was up 15 percent.

Market sentiment

The Seoul KOSPI Index followed suit in 1988, outperforming the average by 34 percent, and this trend continued right through to Beijing in 2008 when the Shanghai SE180 increased at a rate of 26 percent above the average.

“Deloitte’s analysis of the outperformance of host-country stock exchanges is broadly in line with previous behavioral finance studies, which have indicated that major sporting events have a discernible impact on market sentiment,” James Ferguson, a capital markets partner at Deloitte, said. “While the current economic woes blighting the eurozone cannot be overlooked, history shows us that host countries’ stock markets do benefit in the short term from the games. The exchanges of the host countries are all very different, so the reasons for the over-performance are complex to analyze. Let’s hope the London markets get a boost to match what has happened after previous Olympic Games.”
The average performance of a selection of major global stock exchanges was calculated as the average returns of the FTSE 100, S&P 500, Nikkei, CAC 40, DAX, Zurich MSCI and Hang Seng, Deloitte said. “Nasdaq was not included in addition to the S&P 500 to avoid overweighting U.S. performance,” the company said.

London, the capital city of the United Kingdom, is currently hosting the Olympic Games.
The most important event in the world of sports in London began on July 27 and will continue until Aug. 12.