Potential Spanish World Cup win points to GDP rise, cheers up investors
The shares of large Spanish companies started gaining ground once the country’s national football team qualified to the finals of the Football World Cup held in South Africa, and the cup winer’s gross domestic product could rise, according to statistics, by 0.1% to 0.3%, according to website Marketwatch.
Aside from the bursts of joy heard on the streets, there were bursts of joy on the Madrid Stock Market as well, with the IBEX-35 index continuing to rise after Spain defeated Paraguay in the quarterfinals held on July 3.
The Spanish stock market completed the past six trading sessions on a rise and closed above the 10,000 points psychological threshold for the first time in the past three weeks, when Spain defeated Germany in the World Cup semifinals.
At the same time, the shares of Gestevision Telecinco, which owns the broadcasting rights in Spain for the World Cup games, rose 16% since the Spanish team’s qualification in the quarterfinals. It is likely that many Spaniards see Sunday’s game, against Holland, as a true test, during which the entire nation will hold still and hold breath, to see which will be the victor.
The Madrid bourse’s main index posted one of the weakest evolutions in the world since the beginning of the year, joining the Athens stock market index in rear guard of economic growth. This prompted fears that Spain might be the next Greece and that Spain and Greece will ultimately lead to the downfall of the euro and the crumbling of the euro zone.
However, in the beginning of the week, markets registered some visible relaxation, as investor appetite returned, including after the auction that ended in the collection of EUR6 billion from 10-year stat bonds issued by the Spanish state.
In addition, the information that transpired this week regarding the stress testing of banks, information of high importance for Spain, boosted investor confidence and got the bourse moving again.
While the Spanish football team is ranked as top tier in the football world, the Spanish economy is lagging behind, seen by the international community as one of the poorest economic players.
However, researchers from South Korea’s Solomon Investment Group published Friday a report by which, from a historic standpoint, the winner of the Football World Cup stands to gain 0.1% to 0.3% in the gross domestic product.
According to Juan Rodriguez-Rey, economist specializing in the sale of institutional stock for Banco Sabadell – Ibersecurities in Madrid, this hypothesis would not be completely devoid of sense, but given the bad shape of the real economy, especially in Spain, where unemployment hit some 20%, this might be tough to pull through.
In Spain, this particular piece of information, dished by the South Korean report, brings nothing but joy to investors. Spain’s gross domestic product contracted byan annual 1.3% in the first quarter this year, and the International Monetary Fund announced it expects Spain’s gross domestic product to contract by 0.4% this year and widen by a mere 0.6% in 2011.
Although many analysts are skeptical regarding a possible rise in the GDP based on the Football World Cup, apparel maker Adidas has announced the sale of one million national team shirts. Over 13,000 Spanish flags were sold daily throughout the World Cup.
