Games will not offer a winning opportunity

The Olympics are expected to give a £5.1bn boost to the economy. But UK investors are unlikely to benefit.

Hosting the Olympic Games has consistently failed to give a stock market boost. That's bad news for those backing UK firms over this summer's sporting events.

In January, Your Money looked at the prospects for the UK ahead of the London Olympics.

Then, Jon Wingent of Close Brothers Asset Management, said: "Hosting an Olympics enhances investment opportunities that might not otherwise be there such as travel, tourism, leisure and retail."

But analysis of the investment performance of the last five countries to host the Games paints a depressing picture. Only Greece and the US reported a small gain, but in China, Australia and Spain, the market fell over the period one month before the Games until their end (see graphic). The Barcelona Olympics actually saw an almost 15 per cent fall in Spanish stock markets.

Darius McDermott of Chelsea Financial Services pointed out: "Markets have generally traded sideways in the run up to and during the Olympic Games. This could be due to people's minds being on other things, but also because the Games tend to fall in the summer months when investors and trading can be quieter too."

But he said any potential uplift will have already been figured into markets while investors are, in any event, more concerned with macro issues at the moment.

"The investment benefits from the London Olympics have generally been played out already, with the exception of tourism," Mr McDermott said.

"The wider issues of unsolved European sovereign debt issues will outweigh any Olympic sentiment when it comes to stock market performance in the next few weeks."

Jonathan Barber of Threadneedle UK Monthly Income fund agreed.

"The positive impact of Olympic effects on the UK market pale into insignificance alongside macro events such as the further unfolding of the eurozone debt crisis and the outlook for global growth in 2012," he said. "These macro issues will continue to drive market volatility in the short term, particularly as three-quarters of UK corporate earnings come from overseas."

Julian Chillingworth, chief investment officer at Rathbones, said: "Any longer-term input in the economy will depend on how effectively the Olympic stadia and related buildings are exploited – something China did not do post the Beijing games. What we don't want is another Millennium Dome scenario."

Fen Sung, manager of the Premier China Enterprise fund, said China did see some short-term gains at the time of the 2008 Beijing Olympics.

"Tourism and construction were working well but the benefit was short-lived. A lot of money was spent, but the Bird's Nest Stadium – the focal point of the Games – is not being used today," he said.

Beyond that, why didn't China get more investment benefit from hosting the Games?

Charlie Awdry of the Henderson China Opportunities fund explained: "In China, investors didn't appreciate how disruptive hosting the Olympics was for business activity. In particular, we saw strong economic activity as business and construction was brought forward ahead of the Olympics.

"But then China seemed to have a national holiday for the duration of the Games and when people returned to work the global economic outlook had deteriorated. Activity levels fell and inventories had to be worked through which made the downturn even worse."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Christine McCleave: Management Accountant

    £28,000 - £31,000: Christine McCleave: Are you looking for a new career in ret...

    Anna Woodward: Anna Woodward

    £25,000: Anna Woodward: My client is a rapidly expanding global company who sp...

    Beverley James: Transactions Manager

    £30,000: Beverley James: A fantastic opportunity has arisen for a person looki...

    Beverley James: Sales Ledger Clerk

    £26,000: Beverley James: A fantastic opportunity has arisen for a person looki...

    Day In a Page

    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?
    How we must adjust our lifestyles to nature: Welcome to the 'Anthropocene', the human epoch

    Time to play God

    Welcome to the 'Anthropocene', the human epoch where we may need to redefine nature itself
    MacGyver returns, but with a difference: Handyman hero of classic 1980s TV series to be recast as a woman

    MacGyver returns, but with a difference

    Handyman hero of classic 1980s TV series to be recast as a woman
    Tunnel renaissance: Why cities are hiding roads down in the ground

    Tunnel renaissance

    Why cities are hiding roads underground
    'Backstreet Boys - Show 'Em What You're Made Of': An affectionate look at five middle-aged men

    Boys to men

    The Backstreet Boys might be middle-aged, married and have dodgy knees, but a heartfelt documentary reveals they’re not going gently into pop’s good night
    Crufts 2015: Should foreign dogs be allowed to compete?

    Crufts 2015

    Should foreign dogs be allowed to compete?
    10 best projectors

    How to make your home cinema more cinematic: 10 best projectors

    Want to recreate the big-screen experience in your sitting room? IndyBest sizes up gadgets to form your film-watching
    Manchester City 1 Barcelona 2 player ratings: Luis Suarez? Lionel Messi? Joe Hart? Who was the star man?

    Manchester City vs Barcelona player ratings

    Luis Suarez? Lionel Messi? Joe Hart? Who was the star man at the Etihad?
    Arsenal vs Monaco: Monaco - the making of Gunners' manager Arsene Wenger

    Monaco: the making of Wenger

    Jack Pitt-Brooke speaks to former players and learns the Frenchman’s man-management has always been one of his best skills
    Cricket World Cup 2015: Chris Gayle - the West Indies' enigma lives up to his reputation

    Chris Gayle: The West Indies' enigma

    Some said the game's eternal rebel was washed up. As ever, he proved he writes the scripts by producing a blistering World Cup innings
    In Ukraine a dark world of hybrid warfare and murky loyalties prevails

    In Ukraine a dark world of hybrid warfare

    This war in the shadows has been going on since the fall of Mr Yanukovych
    'Birdman' and 'Bullets Over Broadway': Homage or plagiarism?

    Homage or plagiarism?

    'Birdman' shares much DNA with Woody Allen's 'Bullets Over Broadway'
    Broadchurch ends as damp squib not even David Tennant can revive

    A damp squib not even David Tennant can revive

    Broadchurch, Series 2 finale, review
    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower: inside the mansion of Germany's 'Bishop of Bling'

    Inside the mansion of Germany's 'Bishop of Bling'

    A Koi carp breeding pond, wall-mounted iPads and a bathroom with a 'wellness' shower