With just a couple of days to go for the 2018 FIFA World Cup in Russia, the football fervor is spreading with lightning speed across the world. It is a potential trigger for sales trends in a few countries, especially for the host, and usually leads to a buying frenzy. This in turn will result in robust stock market gains, with a few countries or sectors scoring the highest from the tournament.
What’s on A Roll?
The World Cup has propelled economic activities of the host country and will continue to do so over the long term. According to the tournament’s organizing committee, the soccer will have a total positive impact of nearly $31 billion on the economy and could boost Russia’s GDP growth by 1.62 trillion rubles ($26 billion) to 1.92 trillion rubles ($30.8 billion) over 10 years from 2013 through to 2023. The surge would be driven by higher construction spending, increased investment and growing tourism.
Per the latest study conducted by the McKinsey consultancy, the mega football event could generate around $15 billion of GDP in Russia, which tops the impact of similar championships in Brazil, South Africa, Germany and South Korea. However, it is second only to the result of Japan. The World Cup will also drive tourism in Moscow by 10%.
Apart from Russia, the British economy is also expected to get a boost of £1.33 billion from fans and well-wishers if England makes it through the second round of the World Cup, and of £2.72 billion if it makes it through to the finals. Pubs, restaurants, cafes and clubs are set to benefit most with £193 million expected to be spent by consumers watching the tournament. The amount may rise to a huge £488 million if England makes it to the final match (read: Brazil ETFs to Watch amid Domestic Woes & GDP Uptick).
Being the biggest sporting event on the planet, the championship is also a money-spinner for media networks (TV, digital and social media) and advertisers, attracting billions of revenues in a month. Zenith Media projects worldwide advertising revenue to grow $2.4 billion from the month-long event. China will get the biggest boost with an additional $835 million on advertising, ahead of the United States, which will spend an additional $400 million, and host nation Russia, which will see a $64 million increase.
Social media will also play a vital role in viewing the real-time matches and sharing the favorite moments. Additionally, the tournament will create heavy traffic for news and sports sites, and extra searches that would lift broad online advertising revenues (read: Social Media ETFs to Gain as Twitter Prepares for S&P 500).
Moreover, the World Cup is considered one of the biggest betting events in the gambling industry. Millions of soccer fans will visit their sportsbooks either online or land-based, to make their bets. The Gambling Commission projects betting revenues this year to surpass the £1 billion plus revenues generated in 2014 over the course of the tournament in Brazil.
ETFs to Bet On
As the tournament is a high-seeded top-line driver for various corners of the market like sponsors, media and networking players, as well as a revenue generator for a few economies, investors can score the highest by jumping into the ETFs in these spaces. Any of the products mentioned below could make for an exciting World Cup play.
VanEck Vectors Russia ETF (RSX - Free Report)
This fund offers exposure to the Russian stocks and follows the MVIS Russia Index. It holds 30 stocks in its basket with energy making up the top sector at 43.6% of assets. RSX is the most popular and liquid play on the Russian economy with AUM of $1.6 billion and average daily volume of 8.9 million shares. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 4 Country ETFs That Should be Beneficiaries of $70 Oil).
iShares MSCI Brazil ETF BRZ
This product targets the Brazilian stock market and tracks the MSCI Brazil 25/50 Index, holding 54 stocks in the basket. About one-third of the portfolio is dominated by financials, while materials, consumer staples and energy round off the next spots with double-digit exposure. The ETF has amassed $6.8 billion in its asset base while trades in a heavy volume of 21 million shares. It charges 62 bps in annual fees and has a Zacks ETF Rank #3 with a High risk outlook.
Global X Social Media ETF (SOCL - Free Report)
This fund provides access to social media companies around the world by tracking the Solactive Social Media Total Return Index. It holds 35 securities in its basket with American firms making up for 46% share, followed by China (31.3%), Japan (6.8%) and Russia (6.2%). The fund has $194 million in AUM and average daily volume of about 84,000 shares. Expense ratio comes in at 0.65%. SOCL has a Zacks ETF Rank #3 with a High risk outlook.
VanEck Vectors Gaming ETF (BJK - Free Report)
This ETF provides investors exposure to companies involved in casinos and casino hotels, sports betting, lottery services, gaming services, gaming technology and gaming equipment. It follows the MVIS Global Gaming Index, holding 44 securities in its basket. In terms of country exposure, United States takes the top spot at 42.3%, followed by China (17.1%) and Australia (12.8%). It has AUM of $38.5 million and average daily volume of roughly 23,000 shares (read: Is Legal Sports Betting Boon or Bane for Casino Gaming ETF?).
PowerShares Dynamic Media Portfolio (PBS - Free Report)
This fund provides exposure to companies that are principally engaged in the development, production, sale and distribution of goods or services used in the media industry by tracking the Dynamic Media Intellidex Index. It results in a small basket of 30 media stocks with media companies making up for 60% of assets. The product has accumulated $49 million in its asset base while trading in a light volume of about 15,000 shares a day. It charges 63 bps in annual fees and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Comcast Might Thwart Disney-Fox Deal: Media ETFs in Focus).
Pro Sports Sponsors ETF (FANZ - Free Report)
This fund tracks the ProSports Sponsors Index, an equal-weighted index that measures the performance of companies that are the official sponsors of the major professional football, baseball, hockey and basketball leagues in the United States or national sports broadcasters with rights agreements with such leagues. It holds 75 securities in its basket and charges 69 bps in annual fees. The ETF has accumulated $5.8 million in its asset base and trades in a small average daily volume of 1,000 shares.
These products are expected to benefit from the soccer tournament given the huge revenue-generation scope for media, advertisers and gaming industry. The mega event is also expected to give a GDP boost to the Russian and Brazilian economies.
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