Financial Spread Betting During the World Cup
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Financial Spreads, the London based spread betting company, have released their guide to trading the stock markets around the 2010 World Cup.
According to Financial Spreads there are a variety of sectors that look promising. Naturally the bookmakers, the pub chains and retailers who sell England merchandise are worth investigating.
According to Adam Jepsen, a spokesman for Financial Spreads, “The problem with trading shares around the World Cup is that much of the positive effect of the tournament will already be priced into the shares. Also if England perform poorly, or if they are just plain unlucky, then some of the more obvious buys become sells.
“Having said that, with Financial Spreads you can speculate on stock markets and shares that are listed in some of the more consistent countries.
“For example, looking at German shares an investor could speculate on the Adidas share price to increase. And there won’t be much getting away from Adidas this summer. They sponsor both Germany and France, they are official FIFA partners, they sponsor players like Lionel Messi and David Villa. They even supply the match balls”.
It is also possible to spread bet on other European shares such as Carlsberg, however, the Danes are not the 2010 sponsors. In contrast, the US stock market does supply a few sponsors in the form of McDonalds and Coca Cola.
Another option is speculating on the South African Stock Market to perform well. During the more recent World Cups the host nation’s leading stock market index has performed well around the tournament.
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(prices as of 12.15pm, 7 June)
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Looking closer to home though, the shares of the various UK bookmakers are tempting but there are a few pitfalls. If England do not progress beyond the Group Stage then revenues will certainly be down. If England were to win the World Cup and Rooney were to pick up the Golden Boot, not an inconceivable combination, then the bookmakers could be facing some rather damaging payouts.
An Irish bookmaker like Paddy Power with less England specific exposure could be a less risky trade. Having said that Paddy Power also have a sports hedging business whereby a firm, eg a Furniture Company, offers its new clients a discount if England win the World Cup. The Furniture Company then hedges off that risk with Paddy Power. This additional exposure makes these particular Irish shares a less tempting proposition.
Elsewhere, the UK’s pub chains should experience reasonably brisk trade but again much of the upside could already be priced into the shares and there might be better value elsewhere.
“Looking at the more traditional sports retailers like JJB and Sports Direct they also have positives and negatives. They should see increased England shirt sales but the supermarkets are increasingly active in that market. Tesco are even an official England sponsor for 2010. The extra sponsorship, shirts sales and merchandise should give the shares boost. Also the other positive for Tesco is that if the England team enjoys a good run that should further boost alcohol sales.
“Adidas should not be ruled out and neither should trading the South African Stock Market however Tesco does have a few more strings to its bow. The supermarket also has fewer downsides and for that reason it is probably the stock to watch out for.” concluded Jepsen.
About Financial Spreads.
Based in London, Financial Spreads is a trading name of London Capital Group (LCG) which is authorised and regulated by the Financial Services Authority.
Investors can spread bet on stock market indices, shares, foreign exchange rates, commodities, bonds and interest rates over the phone. The commission free spread betting service lets account holders speculate on markets to go up or down and includes access to a range of charts and research data.
While LCG attempts to ensure that the information herein is accurate at the date the information was produced, LCG does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information provided herein and under no circumstances are they to be considered an offer, solicitation to invest or be construed as giving investment advice.
Financial Spreads Account / Website |
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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary
Article provided / approved by Financial Spreads which is a trading name of London Capital Group Ltd which is authorised and regulated by the Financial Services Authority (FSA), FSA Register number 182110
'Financial Spread Betting During the World Cup' edited by DB, updated 14-Jun-10
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