The economic impact of the Olympic Games and there are also those who wonder if the Games have a positive impact on the stock markets of the countriesthey host them.
Atlanta 1996 Stock Market Champions
XTB has conducted an analysis of the performance of the host countries’ stock markets in the twelve months following the end of the Games. If we consider the last ten Olympic Games, from Los Angeles 1984 to Tokyo 2020at first glance there is no clear trend. But in most cases, the final result is positive, sometimes even very positive. The best performance is that of the 1996 Atlanta Olympic Games: in fact, in the year following their end, in Georgia, the US stock index S&P500 rose by as much as 31%
Also Seoul 1988 brought about a strong price development in South Korea. The KOSPI index rose 28% after one year – the same value as the Athens Composite after the Athens Games in 2004.
However, the performance of the domestic stock market of Sydney, Australia, was weak in 2000. The first Games after the turn of the millennium were followed by a rather weak twelve months on the stock market: the S&P/ASX 200 fell by 7% – this was the weakest performance of a stock market in the months following the Olympics. Beijing 2008 also recorded a performance in the red, with the Hang Seng Index falling by -3%. Japan followed with +1% in 2021 ) due to the Coronavirus, The 2020 Games in Tokyo took place a year later).
Only Sydney and Beijing “in red”
To tell the truth, only after three of the ten post-Olympic years the respective national stock exchanges achieved a performance of less than 10%. The truth is that the Sydney stock market performance in 2000 and 2001 was characterized by global price distortions following the bursting of the dot-com bubble.
2008 and 2009 were also marked by the financial crisis in China, and Tokyo hsuffered, like the rest of the world, in 2020/2021 due to the Coronavirus.
Stocks: Macroeconomic picture always prevails
As he states David Pascuccimarket analyst for XTB, during the 2000 Sydney and 2008 Beijing Olympics, we were in a global economy which presented a macroeconomic scenario with very high interest rates and low unemployment levels especially for the Western economies of Europe and the USA. A similar situation is presenting itself at this time with a similar scenario, surprisingly coinciding with the periods of 2000 and 2008.
As in those cases, we have seen some central banks to implement expansionary policies (rate cuts) in the face of a worsening of the overall labor market situation, a situation that is still evolving and which will probably be of great interest to the central banks.
It is a curious case that precisely in 2000 and 2008 we also had the presidential elections in the USAan event coinciding with the Olympics and which is mistakenly attributed to a continuation of the rise in stock prices, increases which are systematically normal but which require careful analysis and contextualisation to the macro and technical scenario. In these cases, macroeconomics prevails always on exogenous events on a global scale.
