Weekly: World Cup, Economies, and Markets


Our top-two picks for the World Cup are Germany and Brazil. Top ranking in football is the playground of middle- and upper-income economies. When ranking falls below 50, income and performance link fa...
Taimur Baig, Ma Tieying14 Jun 2018
  • Asian countries have by and large slipped in their rankings in the past decade
  • China’s football dream remains unfulfilled
  • The STI has declined by an average of 8.6% in the two months around the past six World Cups
  • In the credit space, the six months after a World Cup…
  • …tend to be better than the preceding six months
Photo credit: AFP Photo


There will be late nights across Asia for the next one month as football fans give up sleep to follow the World Cup Football tournament in Russia. Asia doesn’t have a stellar record in this premier event, but that doesn’t detract from passionate following.

First, who will win? In Group Research, we have no shortage of data crunchers, but we also have those who go entirely with their hearts. Our internal polls find Germany and Brazil are the top two favourites, in line with market odds. But that’s where our alignment with the market ends. Strangely, we found no takers for highly ranked Portugal and Spain, but a few of us like Belgium and France.

Do more prosperous countries do better in football? When we consider real per capita GDP of the top-50 teams ranked by FIFA we find that except for two outliers (Senegal, ranked 27, and Congo, ranked 39), high ranking in football is indeed the playground of middle- and upper-income economies.

But this empirical regularity holds only in the top-50. For the countries ranked 51-100, we see virtually no relationship between income and performance whatsoever.

For us here in Asia, even the 1 to 100 rank is not sufficient to find most countries of the continent. Indeed, Asean countries are all ranked well below 100, and even the most successful Asian countries, Japan and South Korea, rank below 50. China, despite its massive investments in recent decades, remains mired at 75. Compare that with tiny Iceland (population: 330k, ranking: 20) and Bosnia (3.5mn, 40).

Not only are Asian footballing nations poorly ranked, they have by and large become worse over the past two decades. Countries from Eastern Europe and Central Asia have made significant inroads since then, leaving far more prosperous and populous Asian economies behind. Clearly, while Asia is hard at work studying, building, and saving, something is getting lost in the exhilarating world of football.

In the attached publication, our country economists and strategists look at the experience of Asian stalwarts South Korea and Japan, the gulf between China’s aspirations and reality, and some interesting observations on what the FX, rates, credit, and equities markets do during the tournament. We hope you enjoy the Word Cup, and find our World Cup Special fun.

Economics:
China’s unfulfilled “Football Dream”
South Korea and Japan, Asia’s bright spots
FX: World Cups have been currency friendly
Rates: Europeans are great in football; bad in debt
Equities: Too much watching and too little trading
Credit: A post-World Cup rally?


To read the full report, click here to Download the PDF.


Taimur Baig, Ph.D.

Chief Economist - G3 & Asia
taimurbaig@dbs.com


Ma Tieying

Economist - Japan, South Korea, & Taiwan
matieying@dbs.com

The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only.  It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose.  Opinions and estimates are subject to change without notice.  The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information.  Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities.  Foreign exchange transactions involve risks.  You should note that fluctuations in foreign exchange rates may result in losses.  You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such.  Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof. 

The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation.  The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.