After ECH, EWW and EWZ, the number of U.S.-listed components noticeably declines when looking at the other country-specific ETFs of Latin American World Cup teams, namely the Global X FTSE Argentina 20 ETF (NYSEArca: ARGT) and Colombia ETFs such as the Global X FTSE Colombia 20 ETF (NYSEArca: GXG).
The iShares MSCI All Peru Capped ETF (NYSEArca: EPU) is the lone country-specific Latin America ETF where the underlying nation is not participating in the World Cup. EPU is up 3.3% in the past 90 days.
Volume is, however, just one concern. Another is the reaction of a football-crazed country’s equity markets immediately following a loss in a major international match.
A 2007 paper by The Journal of Finance said the “average return on days after an international soccer win is positive (5.0 basis points), but negative and significantly lower on days following a loss (−18.4 basis points).”
The paper also notes that a country’s small-caps suffer worse following a loss in an important football contest, meaning the Market Vectors Brazil Small-Cap ETF (NYSEArca: BRF) could be vulnerable if the home nation does not win the title as expected. [Buy Brazil ETFs as World Cup Wagers]
iShares MSCI Chile Capped ETF
Tom Lydon’s clients own shares of EEM.