Investors can expect Russian stocks to outperform fellow emerging markets by as much as 10 percentage points after the country won the right to host the 2018 FIFA World Cup, according to a prediction by investment bank VTB Capital. Some money managers agree.
Ghadir Abu Leil-Cooper and Matthias Siller, investment managers at Baring Asset Management Ltd., London, said in a news release that “FIFA's decision strengthens an already strong investment case” for Russia.
The Federation Internationale de Football Association announced Dec. 2 that Russia would host the 2018 World Cup, while Qatar would host in 2022.
Paul Bisping, executive director, emerging markets, at Hermes Fund Managers Ltd., London, noted in an e-mailed response to question that, “If South Africa (which hosted the World Cup this year) is an example of what happens when emerging markets countries win World Cup bids, then we are in for a strong rally over the next three to six months.” South Africa equities outperformed fellow emerging markets by 9.4 percentage points in the year following the winning bid announcement, according to data provided by Hermes.
But Charles Howlett, senior analyst at Matterhorn Investment Management LLP in London, disagreed. “It's a bit spurious to think of (a winning World Cup bid) as an issue” that will drive returns, he said in an interview, adding that outperformance in South Africa could have been caused by a number of factors.
Mr. Howlett noted that Russian publicly traded construction companies are “murky and illiquid,” and that recent WikiLeaks headlines about alleged corruption might be more damaging to Russian stocks than World Cup headlines might help.