Yes, earning euros can really help your stock market

LONDON, July 8 (Reuters) – Euro 2020 semi-final victories for England and Italy mean football is coming home or going to Rome, but the past 20 years show that the fact lifting the European Championship trophy can also raise the stock market.

Of the last five tournament winners, Greece (.ATG) and the Spanish stock exchanges (.IBEX) outperformed the pan-European STOXX 600 (.STOXX) after their victories in 2004 and 2008 and 2012, while only Portugal’s title in 2016 was followed by a notable underperformance.

Perhaps a reflection of the shock of the victory, the Athens market outperformed by 20% six months after Greece won – well before the country’s debt crisis began, of course.

Spain’s first back-to-back wins in 2008 and 2012 came at the height of the global financial crisis, meaning most stock markets plunged, but the Spanish stock market still managed to outperform by losing 5% less than the STOXX 600.

In 2012, it was even more dramatic, occurring during the second peak of the eurozone debt crisis and just before that, ECB President Mario Draghi had calmed things down by promising to do “whatever he wanted.” should”.

This meant that Madrid’s IBEX had initially collapsed despite Spain’s 4-0 victory over Italy in the final. But by the end of this year, it was back in shape and ahead of the STOXX 600 by around 4%.

DENMARK CONSOLATION

Analysts have already looked at this type of impact. A study by Goldman Sachs in 2014 showed that every World Cup winner since 1974 had seen their stock market outperform, with the exception of the 2002 tournament, where Brazil’s victory was overshadowed by a deep recession.

On average, the winner’s local stock exchange outperformed the global market by 3.5% in the first month after the final. Goldman, however, found that the boost generally faded over the next three months and by the time the anniversary of the victory arrived they were underperforming by 4% on average.

What about this year? Well, if that can console Denmark after Wednesday’s semi-final loss to a soft penalty, the Copenhagen Stock Exchange has edged London’s FTSE 100 by almost 5% since the start of the tournament and beat Italy. and the other semi-finalist losing the Spanish market by 6% and 8% respectively.

Deutsche Bank meanwhile pointed out this week that the pound sterling, the currency, has struggled to match the star performance of its English namesake, Raheem Sterling, on the pitch.

As the player was in Denmark’s penalty area on Wednesday, the pound has fallen in trade-weighted terms since the start of the tournament, although this is not uncommon when looking at the currency between the start of the 13 last major competitions for which England qualified, and the day after their reverence.

“There is unfortunately no correlation between performance in the field and returns in the forex markets,” said economists at Deutsche Bank. “The knockout matches have also not seen GBP consistently outperform rivals after wins, or weaken after losses.”

Additional reporting by Thyagaraju Adinarayan; Editing by Giles Elgood

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