South African stocks to watch this RWC

MBOMBELA – Major sporting events often coincide with significant movements in financial markets.

IG, a leading provider of financial spread betting, and the largest forex provider in the United Kingdom, recently took a look at how the IRB Rugby World Cup (RWC) may affect the forex markets.

It shows that when South Africa hosted and won the RWC in 2007, the ZAR increased by 4,3 per cent to the USD and SABMiller’s share price increased by 7,5 per cent during the tournament, A week afterwards, the rand was seven per cent stronger against the British pound.

The Fifa World Cup, hosted by South Africa in 2010, was also interesting not only for putting South Africa on the map, but also putting the spotlights on the Johannesburg Stock Exchange (JSE).

IG’s head of premium client management, Mr Travis Robson, said there was a major drive in building and property stocks.

“A lot of work to build infrastructure took place in South Africa and JSE-listed stocks in that sector saw movement. We also saw a drive higher in alcohol, hotel and, gaming and leisure stocks.”

• Read more on the RWC here. 

Murray & Roberts, Growthpoint, City Lodge Hotels and Redefine were some of the affected stock.

He noted that the moves were probably reflective of a market where investors could have been disconcerted by the financial burden of hosting the games.

“There was also less trading activity during soccer matches with many investors focused on hosting, entertaining or attending games.”

He cited documented reports which showed how significantly market activity had dropped during matches: by 45 per cent during Bafana Bafana’s matches and by 24 per cent during other teams’.

Now, £982 million of value is expected to be added to England’s national GDP, on top of the £85 million already been invested in infrastructure. The tournament is expected to add a total of 41 000 jobs around the country.

“The host nation is usually the most likely focus of any trading impact from a major sporting event.” Robson says SABMiller is one to watch. “I will be following other related companies in the alcohol business as well.”

He is also interested in hotel or property stocks with a link to the UK, retail, accommodation or merchandise companies and restaurants with a link to the UK stock market, as well as health-care companies and gaming or sports-betting businesses.

While hotel and leisure groups are the most obvious sectors to benefit in the country hosting a RWC, Mr Shaun Murison say Uber will be one to watch in terms of deriving benefit as well, since transport is a necessity and Uber a popular choice over metered taxis.

Murison is also keeping an eye on the Springboks’ sponsors: Barclays Africa/Absa, SABMiller, Tsogo Sun, Vodacom and Spur. “All of these businesses will hope that their investment is rewarded with a run deep into the tournament.”

Major RWC sponsors Toshiba, Coca-Cola, Heineken, Land Rover, Societe Generale and DHL will also get major airtime during the tournament, according to Mr Leigh Riley.

Robson adds, “If South Africa manage to claim a record third William Webb Ellis trophy, then plenty of markets could see movement. The FTSE/JSE Top 40, South Africa’s major index, may see some benefit.”

Holdsport, a sporting-goods chain reported a big impact when New Zealand claimed the title on home soil in 2011. If South Africa win, that impact could be replicated and Mr Price Sport may see a similar effect.

The local TV rights are held by Naspers DStv which may see some benefit from increased viewership. Discovery usually has TV advertising during the games, so it could be one to watch.

Riley concludes: In practical terms, celebrating South Africans will need beer (SABMiller), braai (Woolworths, Pick n Pay, Shoprite) and hangover medication (Clicks).

A lot of these companies will also benefit from a stronger pound as they earn offshore revenue.

• Don’t miss: The Springboks take on the USA in their final group stage match tonight. Kick-off is at 17:45.