Daily Insight: How Nigerian Equities Perform During World Cup Tournaments

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An ECB study of 15 bourses during the 2010 World Cup concluded that trading volumes plunged 45% when a national team was playing, with an additional 5% decrease when goals are scored. Compared to 38% and 43% declines in European countries and the US respectively, trading volumes in ‘football-crazy’ South American countries, especially in Brazil, Argentina, and Chile, over 75%, plunged the most. 

Interestingly, in the Nigerian market, average volume traded also fell 34.5% compared to the corresponding period during the 2014 World cup and 25.1% during the 2010 World cup. However, the local bourse recorded a positive return in 3 of the last 5 world cup tournaments since 1998, up 7.9%, 7.2% and 4.1% during 2002, 2006 and 2014 respectively though Nigeria was absent in 2006 tournament. On the other hand, the local benchmark index dipped 2.2% and 3.1% during the 1998 and 2010 tournaments respectively.

While the Nigerian historical data above tilt in favour of a potential uptrend for the local bourse during the on-going World Cup in Russia (60% chance), we note that market return has been bearish in the last two trading days since the tournament began. However, a turnaround before the end of the week is likely as investors hunt for a bargain.

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