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Sporting moments and the markets

  • Major sporting events – including the Olympics, Ashes and World Cups – can coincide with movement across indices, currencies, stocks and more

  • Which markets might be affected by the Rugby World Cup?

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Rugby World Cup 2015 – market impact

Elite sport and financial trading share many similarities. Both require a cool head, reap benefits from studious preparation, and tread a fine line between success and failure.

We’re going to be taking a look at the share listings of this year’s competition sponsors, as well as the indices and currencies of some of the countries taking part. Could a momentous victory for one of the home nations lead to movements in the markets?

Rugby World Cup sponsors

Sponsoring a sporting event can deliver huge boosts to a brand. But how much does its share price feel the effect?

Last year, Coca-Cola’s sponsorship of the FIFA World Cup coincided with some impressive increases in its share price. Heineken, Societe Generale and DHL (listed under Deutsche Post) will be among the sponsors hoping to benefit from this year’s biggest tournament.

Markets Bid Offer Updated Change
liveprices.javascriptrequired
Heineken NV
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Deutsche Post AG
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Societe Generale SA
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Prices at 16:30 (UK time) on 18/09/15 – start of RWC.

Heineken: 63.70 | Deutsche Post: 23.69 |
Societe Generale: 40.46

Rugby World Cup currencies & indices

The jubilation of a sought-after cup victory – or disappointment of a missed opportunity – can affect traders as well as players and fans. Ashes victories, for instance, can impact markets in either hemisphere.

England’s last Rugby World Cup victory came in 2003, and coincided with a major rally for the FTSE and the pound. New Zealand, Australia and South Africa will all be hoping that a record third win could have a similar effect – while France, Scotland, Wales and Ireland chase their very first trophy.

Markets Bid Offer Updated Change
liveprices.javascriptrequired
FTSE 100
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Spot FX GBP/USD
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Australia 200
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France 40
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Spot FX EUR/USD
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Spot FX NZD/USD
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Spot FX USD/ZAR
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Q&A with the analysts

What markets might be influenced by the Rugby World Cup (RWC) 2015?

The UK is the world’s fifth largest economy globally when you look at gross domestic product (GDP) in nominal terms, so the impact of the Rugby World Cup (RWC) will be less pronounced than in many other smaller economies. Still, the economic benefits to the UK are real and according to Ernst and Young’s estimates, some 466,000 international visitors will make their way to the UK to watch the games.

In fact, the total number of spectators should easily eclipse any prior rugby tournament and should be just shy of the 2002 FIFA World Cup in Japan. In total the Rugby World Cup is expected to deliver up to £2.2 billion in output to the UK economy.

Given the level of attendance and spectators and impact on future growth the natural beneficiaries will be UK and some European listed shares. With discretionary spend likely to add to a pick-up in retail sales, I continue to like sterling exposure relative to currencies dependent on commodities. 

The benefits of hosting the RWC for the UK economy are not focussed on a single area, but instead spread around – and that makes judging market impact difficult.

The demographics for those nations taking part in the event and the natural volume of visitors from those countries make it difficult to accurately judge the number of increased visitors. How many of the anticipated 466,000 coming for the RWC –  including Aussies, Kiwis & South Africans – would have been coming anyway?

The largest demographic of supporters from another currency will probably be coming from Europe as Ireland, Italy & France all use the euro. It is hard to believe that this increase in tourism will outweigh the fundamentals of what is going on in the Eurozone, though.

Which Companies will you be keeping an eye on during the Rugby World Cup?

The success of England and the ability of the major nations such as New Zealand, South Africa, Australia to navigate their way to the later stages of the tournament will dictate how much upside will be available to broadcasters.

ITV could benefit from increased market share of TV viewers and therefore future advertising revenue if it were to end up being a closely fought competition and England were to win. The viewing and advertising from this competition has already been factored in to the company’s share price as this has been an event the markets have been aware of for some time. The real benefits for ITV would come from the terms written into the existing contracts should England progress. If ITV were perceived to have done a good job covering the event and the host nation could even win it then they would have a far stronger hand in any future advertising negotiations for future events.

Yes, ITV is the obvious place to look: although the market is already factoring in strong 15% EPS and 12% revenue growth in 2015.

With an estimated 466,000 international visitors expected to descend on the UK, one would expect airlines and hotels to get an extra revenue boost and of course when there’s rugby involved you always expect increased demand for beer. Heineken are expected to record 12% EPS growth in 2015 and 11% in 2014 and are a major sponsor, so any commentary from management about the impact of the RWC on the top line will be of interest.

In this vein, the impact of the RWC on SABMiller and InBev will be keenly watched. There may well also be a boost to the listed betting houses such as Betfair and William Hill.

Which of the sponsors will you be following during the Rugby World Cup (RWC)?

Of the major sponsors for the Rugby World Cup, Heineken are probably the only one that will see an upturn in revenue along with Emirates airlines which might pick up a slightly larger slice of the travelling fans from New Zealand, Australia and South Africa. The others Mastercard, Societe Generale, Land Rover and DHL are more likely to benefit from the improved branding of their business rather than any real upturn in revenue. 

Should England progress to the final this will give ample opportunity for Heineken to improve its sales as they will have an exclusivity agreement with the sporting venues. There will also be an ability to improve its brand awareness within the rugby playing demographic: a community renowned for its drinking prowess.

From a pure markets perspective MasterCard, Heineken and Societe Generale will be closely watched.

Societe Generale have the right demographic for the World Cup and should benefit from increased brand awareness. The French bank looks like a solid investment anyway in my opinion, especially when it pullbacks into the €40 area.

With 14% EPS and 3.6% sales growth expected into 2016, and with compelling 5% yield I like the idea of buying pullbacks in a business that is trading on a multiple in-line with its long term average. The European Central Bank is providing huge levels of liquidity through French banking channels, so despite improving economics in Europe I feel Societe Generale will continue to easily outperform the broader market.

Who do you want to win the Rugby world cup (RWC) and who do you think will win?

Naturally as an Englishman I will be wearing the red rose with pride and think with home advantage and a strong and disciplined performance in the Six Nations they could challenge, especially with the benefit of fortress Twickenham.

Having lived in Australia for nine years I should show some allegiance to the Wallabies: though while I see them getting through the group stage at the expense of Wales, I feel South Africa will ultimately be the better side in the quarter finals.

New Zealand should win the tournament as they are just so strong and have so much depth. Ireland offer value as well, and on their day they can beat anyone and you know the Irish fans will bring their A-game especially in the latter stages. South Africa will also be in the mix, especially after their rousing performance against New Zealand in Johannesburg.

So, New Zealand are rightful favourites, but England, Ireland and South Africa can all win given the right conditions.

As a Scotsman I would obviously love to see my team do well but winning it is an outrageous prediction that only the Scottish Rugby Union would make. 

History would suggest that the winners will come from England, Australia, South Africa or New Zealand. However rather than plump for the easy option of picking the All Blacks I would suggest a little more value and probably more interest too might come from choosing France. Of the previous seven tournaments France have been losing finalists on three separate occasions; last time losing to the All Blacks in New Zealand by just one point. 

The unpredictability of France is one of their biggest attractions and looking at their recent results and the shambles of a Six Nations tournament that they have just had I would suggest that France – unpredictable as they always are – could be in with a real shout.

Sporting moments, surging markets?

Have previous sporting events coincided with market movements? Take a look at what's happened after other major sporting moments.

Wimbledon, 2013

Rugby World Cup, 2007

Ryder Cup, 2012

Olympic 400M final, 2000

Rugby World Cup, 2003

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