The World Cup not only draws the world’s attention on a single country, it also provides a nice boost in economic activity. Now that Russia and Qatar will be hosts to the world’s largest sporting event, exchange traded funds (ETFs) may become enriched by their successful hosting bids.
The impact was immediately felt in Russia: Its stock market hit a two-year high on news that the country would host the 2018 World Cup, report Alex Nicholson and Jason Corcoran for Bloomberg. Russian Prime Minister Vladimir Putin stated that the country will overhaul its infrastructure to meet the deadline, which could mean big business for Russian steel, transport and construction companies. [3 ETFs to Play Russia’s Economy.]
The Russian government will spend around $3.8 billion on stadiums and expand airports and roads, write Jason Corcoran and Denis Maternovsky for BusinessWeek. Chris Weafer, chief strategist at UralSib Financial Corp, believes that total spending may reach as high as $500 billion.
- Market Vectors Russia (NYSEArca: RSX)
- iShares MSCI Russia (NYSEArca: ERUS)
- SPDR S&P Russia (NYSEArca: RBL)
- Market Vectors Steel (NYSEArca: SLX)
Four years after Russia, Qatar will host the 2022 World Cup, according to James Montague for CNN. Part of the country’s success is attributed to the years and billions of dollars in investments dedicated to developing sports – especially football (that’s soccer, of course). Additionally, Qatar has implemented a solar power cooling system that provides zero-carbon air conditioning to help athletes live through the sweltering heat. [How Qatar Keeps Gulf ETFs on Investors’ Radar.]
Qatar’s economy is expected to expand 15.5% this year and potentially surge 21% in 2011, which will help the country fund infrastructure and stadiums for the World Cup, reports Regan E. Doherty for NBC Sports. The country will renovate three stadiums and build nine new stadiums at a cost of around $3 billion.
- WisdomTree Middle East Dividend ETF (NYSEArca: GULF): Qatar is 24.2%
- Van Eck Market Vectors Gulf States ETF (NYSEArca: MES): Qatar is 24.1%
What kind of impact could a World Cup hosting bid have on a fund? It’s a potentially significant one. Billions of people watch the World Cup on television and thousands flood the host country to attend the games. It’s the most popular sporting event in the world, and it’s a country’s opportunity to introduce itself to a new audience. As a result, hosts often spend billions getting ready for their close-ups. World Cup 2014 host Brazil, for example, has spent $2.8 billion building stadiums alone.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.