The Olympics of the pandemic year to test the legend of stock market gold

TOKYO – Summer Olympics report victory on host nation’s stock exchange – which at least suggests past market data.

But 2021 is no ordinary Olympic year. With the Summer Games days before the start of Tokyo clouded by coronaviruses to empty venues, no tourists and lukewarm public support, past performance may not be an indicator of gains this time around.

Of the eight Summer Games held since 1988, host countries have seen their benchmark stock indexes rise in the year following every Sydney Olympics except 2000, according to Shoji Hirakawa, global strategist. chief at the Tokai Tokyo Research Institute.

“The transportation networks and other infrastructure built for the Games boosted productivity, which likely led to growth in corporate profits,” Hirakawa said.

“Even without spectators, we might expect stock prices to rise,” he said.

Others see a correlation between strong Japanese performances at past Olympics and stock market gains. The Nikkei Stock Average has risen in the five Summer Olympics since 1968, when Japan won 10 or more gold medals, said Akiyoshi Takumori, chief economist at Sumitomo Mitsui DS Asset Management.

“The Olympics are a big boost to retail investment and consumer confidence,” Takumori said. The Japanese Olympic Committee said in 2018 it would aim for 30 gold medals in Tokyo.

Investors are looking for winners in the run-up to the Tokyo Games, which begin on Friday. Sporting goods brands are among the most obvious choices to take advantage of a bargain of increased exposure. Nike and Adidas shares hit record highs last week. In Japan, Mizuno peaked since the start of the year on July 12, as did Asics and Descente at the end of June.

Sponsors and companies that increase advertising during the Games will also benefit. Stocks like Coca-Cola, Procter & Gamble and Comcast – the parent company of US Olympic broadcaster NBCUniversal – are expected to get a boost from the event. With more and more people watching the Games from their homes, Japanese market watchers are bullish on electronics retailers like Bic Camera and beer brands.

But sponsorship can be a double-edged sword. Toyota Motor said on Monday that it would no longer run TV commercials related to the Olympics, despite the automaker being a major sponsor. The decision signaled that the automaker is distancing itself from the Summer Olympics and Paralympics.

The unique conditions surrounding this year’s Games have deflated the hopes of the companies that could have benefited from them. Security providers Secom and Sogho Security Services, also known as Alsok, were down 12% and 4% for the year on Monday. Games without spectators mean fewer baggage checks and other security operations, increasing the prospect of reductions in security personnel at venues.

Travel and tourism-related businesses, which were to reap a large chunk of the economic harvest from the Tokyo Games, have been hit hard. Japan Airlines is down 12% and HIS travel agency 5% since September 2013, when Tokyo won the bid to host the event, even as the Nikkei average has roughly doubled in the past. same period.

Stadium and hotel builders Taisei and Obayashi posted strong gains during this period. But with most of the key Games facilities and infrastructure already completed, questions remain about their long-term prospects.

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