subject: Spread Betting On Financial Markets During The World Cup [print this page] 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 wont 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 financial spread betting on the South African Stock Market to perform well. During the more recent World Cups the host nations leading Stock Market Index has performed well around the tournament.
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 UKs 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 mechanise 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.
Spread betting carries a high level of risk to your capital. You may lose more than your initial investment. It 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.
