Companies selling food and drink, retailers and other consumer goods groups offer a sure fire way to gain, according to Societe Generale analysts.
They point out that it is received wisdom among stock market participant that major sporting events have a positive impact both on the economy and on stock markets.
But the much anticipated event is unlikely to benefit shares in either the host country, South Africa, or the winning nation.
‘The World Cup does indeed have a positive effect on the host country’s GDP growth, and consequently on its stock market performance. But a general link cannot be drawn between winning the World Cup and stock market performance,’ said Claudia Panseri, strategist at SG.
She said the World Cup winning nation only outperformed the rest of the world in two cases; 1974 and 1994. 'In the first instance, Germany was both the winner and the host country in 1972. In the second, Brazil in 1994 was experiencing an impressive economic performance after the 1992 recession.
But that doesn’t mean that you can only make any money from buying South African stocks, she said. Shares in a range of food, drink and food retail companies have repeatedly outperformed in World Cup years and SG Securities has collated a basket of 16 shares, nine of them from the UK, that have outperformed by 13.6% during the five World Cups between 1990 and 2006.
Perhaps surprisingly, the list doesn’t include any media or hotel and leisure stocks as history shows stocks in these sectors only outperform ahead of the World Cup.
Its list of shares include supermarket William Morrison, Marks & Spencer, Whitbread, Tesco, Diageo, DSG International, Sainsbury, and Next. Of those William Morrison, Marks & Spencer, drinks group Diageo, Dixons owner DSG International and Sainsbury are rated ‘buy’ by SG analysts.
In Europe, SG have identified beer group Heineken, non-food retailers Hennes & Mauritz and PPR, food producers Nestlé and Danone, chocolate maker Lindt & Sprungli and brewer Carlsberg as previous beneficiaries. The first five are rated ‘buy’ by the SG team.
