As you gain experience in online stock trading, you need to watch out for major events that could shape the market even if they may seem improbable.
History shows that countries hosting large events such as the Summer Olympics usually witness a rise in markets. One of the exceptions was the Sydney Olympics in 2000. Back then the Australian market was down 0.93%. At the 2008 Beijing Games the Shanghai Composite lost a massive 7.69%.
Generally though, in spite of the host country having to spend a significant amount on the games, markets view the investment as a positive factor and reward the nation. And this does impact overseas markets. So it would be worth watching out for the impact of the 2016 Summer Olympics at Rio de Janeiro, Brazil filtering down to the US markets. Successful investors always identify opportunities, so this is worth looking out for.
Who’s Paying for the Games?
The Games are in full swing at Rio de Janeiro, Brazil, but many audiences who watch these games from their mobile phones, laptops or TVs might look at the lack of prominent advertising of sponsoring companies at the venues and wonder, “Who pays for these impressive facilities?”
The IOC (International Olympic Committee) that holds the Olympic Games irrespective of the country, mentions in its website and its PDF document that the major chunk of the revenue for the Games comes from television and Internet broadcasting rights, followed by sponsorship programs. The PDF document states that “global media and sponsorship agreements…ensure the financial security” of the Games as well as the Olympic Movement.
90% of the revenue from these sources is redistributed to:
- The Organizing Committees for the Olympic Games (OCGOs)
- The National Olympic Committees (NOCs) of various nations
- The International Federations (IFs)
- Sports organizations all over the world for the development of sport, and
- The Olympic Solidarity scholarship
However, the host nations themselves also need to find out sponsorship opportunities for their event. For the Rio Olympics there was a good deal of private investment.
Brazil Had to Dig Deep Financially
The total cost of the infrastructure for the Rio Olympics was $12 billion, making it among the most expensive editions of the Games. The billionaire Carlos Carvalho put in a good deal of investment particularly for the Athletes’ Village, which he later plans to convert to a destination for the rich, with expensive condos and apartments facing the Jacarepagua Lake.
Like the aforementioned example, much of the private investment for the Olympics is eventually set to benefit the rich and famous, leaving the lives of the common man and the one in seven of Rio’s residents who live in slums known as favelas untouched. Back in 2009 when then Brazilian President Luiz Inácio Lula da Silva proposed the Olympics idea, it was to develop the infrastructure in Rio and remove the rich-poor divide by making the lives of people living in the favelas better through improved facilities.
Recession-hit Brazil Favoring the Wealthy
But then the recession in Brazil got bigger and bigger and the Rio government did not have sufficient funds to pay for healthcare and security, affecting the lives of the common people the most. As recently as July a “public calamity” was declared by the governor of Rio. In spite of that, the government’s money has made its way to the wealthy Barra da Tijuca region where the Athletes’ Village is situated.
In spite of the insistence of Rio mayor Eduardo Paes that most of the $12 billion required for the Olympics have come from private investors, there have been tax breaks, land transfers and government loans favoring the rich that have gone into the infrastructure development for the Games.
Looking out for the Impact on Markets
All this could further deepen the recession and ultimately have a bearing on the stock market. And as many host countries have endured before, it could end up having to face loss once the games end and the economic impact is realized. But the stock market could have a positive impact thanks to the investment put in by Brazil. And that could reflect in other overseas markets too, including the United States.
To be successful in online stock trading, you need to watch out for such mega events and the impact they create. You also need technology to help you trade effectively. You’ll find that at TradeZero. Call us at +1 954-944-3885 or email firstname.lastname@example.org.
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