27 March 2019
As the World Cup draws near, speculation mounts as to its possible impact on financial markets. Photo: Bloomberg
As the World Cup draws near, speculation mounts as to its possible impact on financial markets. Photo: Bloomberg

Will the World Cup be bad for markets?

A lot can be said about the World Cup but one thing surely stands out in the eyes of Hong Kong people: the locals — or more specifically, stock market commentators — think the soccer tournament will be a curse to the city’s stock market, apart from impacting the property market and affecting businesses such as dining and tourism.

Honestly, it is probably safe to suggest that the stock market will be going nowhere, given the old saying of “sell in May and go away”. In Hong Kong, the traditional adage this year has been extended to “poor May and a desperate June before a rebound in July”, in view of the potential disturbances brought about by the Occupy Central movement.

Let’s examine the case. One commentator has suggested that the Hong Kong stock market will fail during the World Cup period, pointing out that barring the last World Cup in 2010 in South Africa, all the latest four World Cups marked a losing summer for the markets. It was suggested that brokers stayed up late for the exciting games and therefore were in no mood to trade during the daytime, contributing to a rather dull market.

Another commentator noted that market sentiment suddenly turned worse in the second half of the World Cup 2010 when the knockout games of 16 began.

The theories may not have any scientific basis, but a third commentator has noted that the inaugural FIFA World Cup in 1930 was held after the Great Depression and that the curse has taken its toll since 1990 starting with the Gulf war, followed by the Asian financial crisis in 1998, the penny stock meltdown in 2002 and the Euro debt crisis in 2010.

I am sure there will be more similar theories as we count down on the road to Brazil. There will be masterpieces on how BRIC (Brazil, Russia, India and China) will beat PIGS (Portugal, Italy, Greece and Spain) and MINT (Mexico, Indonesia, Nigeria and Turkey).

Fact is: this is only unrelated correlation, not cause-and-effect between stock markets and soccer, although one can probably say both can be exciting and boring – depends on who you speak to.

Meanwhile, it is always fun to read the local dailies. Most papers mentioned the “sell in May and go away” adage a record number of times when the Hang Seng Index was basically going up every day in the past two weeks.

Enjoy the World Cup and all the paper analysis!

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EJ Insight writer

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