The excitement surrounding the London Olympics will not translate to host country or global equity market performance if recent history is any indicator, according to Russell Investments.
The last three summer Olympics have not produced any meaningful differential for host country equity returns before, during or after the event. Stephen Wood, New York-based chief market strategist at Russell, said the Olympics tend to provide more intangible and political benefits to a host country than a measurable financial or economic impact. The larger macroeconomic financial forces appear to put a hold on performance, he added.
The Russell Australia, Greece and Greater China indexes mostly lagged regional and global indexes in the month before, month of and month after the 2000, 2004 and 2008 Olympics, respectively. Greece beat the global index in all three months, but was 1.27 percentage points behind the Developed Europe index the month after the 2004 games.
“The numbers speak, or don't speak, for themselves,” Mr. Wood said.
Still, London could reverse that trend. The Russell U.K. index returned 6.9% in June and -2.26% through the first 24 days of July, beating the Russell Global Index's 4.74% and -2.63%, respectively. The Russell Developed Europe index returned 7.51% in June and -4.66% through the same July period.