Expect Stock Trading To Dry-Up During World Cup | I Love Chile News
Trading volume of the global stock exchanges are expected to dry-up during the 2014 World Cup with Chile looking to be so slow you would think it was closed based on 2010 experience.
A European Central Bank study looked at 15 different countries, nine in Europe, four in Latin America, the US and host country South Africa, and how trading volumes faired while those countries were on the field.
The median drop-off for the group was 55 percent with Chile off the most at 99 percent. Brazil was the next at 74 percent. The EU countries were down the least at 38 percent with the US down 43 percent.
Even for matches that Chile was not involved after the quarterfinals, trading volume was off 79 percent.
The other issue is productivity during the games, which in Chile’s case was an estimated loss of US$268 million in 2010 and is anticipated to rise to US$445 million depending how far or how many games Chile plays in route to the Cup. This is according to Trabajando.com, being that all three first round matches will be during working hours.
The rewards are there for the country that goes the distance. The 2010 winner, Spain, saw their stock market jump 12 percent during the first month after the win. That compares to the median market rise of 6 percent during the same period.
Low trading volume can lead to volatile market conditions. In Chile’s case the single country exchanged traded fund (ETF), iShares MSCI Chile Capped ETF (trading on the NYSE under symbol ECH) should be tempered somewhat as several of its top-ten holdings also trade on the NYSE.
In fact the slowdown has already started in host country Brazil with trading volume below US$1.8 billion everyday last week. The last time we saw that was in February 2009. Year-to-date average trading volume has been approximately US$3.0 billion.
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Randy has a wealth of experience in the financial industry. In 1987, he established his own Investment Advisory Firm, managing money for the State of Hawaii’s pension fund. He wrote a weekly stock column in the Pacific Business News for 21 years, taught Portfolio Management and Investment Strategies at the University of Hawaii for five years and is on KHON’s Morning News as a business & financial analysis twice a week. For the past nine years, he has been active in South America doing business development work for some of his portfolio companies, mentoring entrepreneurs and advising investors.
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Expect Stock Trading To Dry-Up During World Cup | I Love Chile News
