Shocks & Stares » PIGS http://blogs.hillandknowlton.com/shocksandstares H&K\'s Financial & Professional Services Team Blog Tue, 19 Mar 2013 08:00:56 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Euro 2012: Fifa vs. Moody’s http://blogs.hillandknowlton.com/shocksandstares/2012/02/euro-2012-fifa-vs-moodys/ http://blogs.hillandknowlton.com/shocksandstares/2012/02/euro-2012-fifa-vs-moodys/#comments Thu, 16 Feb 2012 17:10:12 +0000 nwoods http://blogs.hillandknowlton.com/shocksandstares/?p=541 It’s 2012, another year in which I can gorge upon a feast of world class sport. The Olympics, the Paralympics, the European Championships and god forbid another failed attempt by Andy Murray to win Wimbledon. The UK may be nearing a ratings agency downgrade but it’s not all bad and a glorious summer awaits.

I wonder what it’s like working in the City when a major sporting event is on. With targets to hit, demanding clients, every pound and every move under scrutiny, I bet they never get chance to scream “REF!!!!” across the trading floor.

Euro 2012 kicks off in 2012 but with ECB research showing inattentive trading during national football matches what impact for the Eurozone? (Image:Euro2012media.com)

Interesting then, that according to the latest bit of research from the European Central Bank, that’s exactly what happens. Its White Paper “The pitch rather than the pit – Investor inattention during FIFA world cup matches” looks at trading data during 2010 World Cup matches and draws some interesting conclusions. My favourite excerpts from the three key findings include:

First, we find strong evidence of decreased activity in stock markets during soccer matches at the 2010 World Cup. Trading activity dropped markedly, especially if the national team was one of the competitors. Compared to normal market circumstances, the median number of trades dropped by 45% if the national team was playing, while the volume dropped by around 55%.”

“Second, we show how goals scored by either team led to an even stronger decline in the number of trades and offered quotes. Also, we find that market activity was already significantly below the benchmark right before the match started, and continued to be lower during the 45 minutes after the match had ended”

 “Third, we show that also price formation was affected during the soccer matches, as the evolution of returns on national markets decoupled from those on global markets.”

Worrying stuff indeed! We all know that lots of research points to the financial benefits of hosting a major sporting event such as the Olympics or World Cup but does this latest study suggest a potential economic threat caused by investor inattention? With the European Championships scheduled for this summer could we finally see sport play a major role in shaping the Eurozone’s economic future?

Whats even more interesting is if you take the official FIFA rankings of those countries qualified (hence their likelihood of progressing further in the competition) and compare this with their respective credit rating:

Country  FIFA Ranking Moodys Credit Rating
Spain 1st A3
Germany 2nd Aaa
Netherlands 3rd Aaa
England 5th Aaa
Portugal 6th Ba3
Italy 8th A3
Croatia 9th Baa3
Denmark 10th Aaa
Russia 13th Baa1
Greece 14th Ca
France 17th Aaa
Sweden 18th Aaa
Republic of Ireland 20th Ba1
Czech Republic 29th A1
Ukraine 59th B2
Poland 70th A2

 

The above analysis not only raises conspiracy theories around the UK Government’s involvement in the appointment of Fabio Capello and hence its relatively robust economic rating but it also points to  potential problem for the PIGS, who’s traders according to form are likely to be inattentive for longer. With this in mind should any of the PIGS nations live up to their footballing prowess we could see the Eurozone put under even greater pressure.

Either way, I’m sure that having undoubtedly read the ECB’s latest research in great detail, both Merkel and Sarkozy will be praying that we don’t get a re-run of 2004. A Greece vs. Portugal final could be catastrophic!

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FPS’ Friday Fiver http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-10/ http://blogs.hillandknowlton.com/shocksandstares/2011/07/fps-friday-fiver-10/#comments Fri, 08 Jul 2011 13:38:14 +0000 David Chambers http://blogs.hillandknowlton.com/shocksandstares/?p=213 Yes, it’s Friday, and even though the weather’s not looking great, it is at least the weekend. Undertandably this week, most people have had their heads focused on one story in particular. However, there’s also plenty else going on which is why nin this edition of the Financial & Professional Services Fiver we bring you some of the stories you may have missed this week.

Thanks as ever to our contributors – this wek, Jo, Ed and Clare.

To save or spend, that is the question…With retailers going bust on UK High Street, you could be forgiven for thinking that consumers have no money to spend. However, quarter two’s Visa Europe: UK Expenditure Index (our client) paints a more complicated picture of consumers’ expenditure behaviour.

Consumers aren't spending and the high street is in trouble. The reasons why are more complex than you might imagine though (Image: Guardian.co.uk)

The Index shows that year on year consumer expenditure increased by 4.4% in quarter two. The monthly data for April, May and June shows year on year increases in expenditure of 4.2%, 4.5% and 4.3% respectively. However when you look more closely at May’s figures, things start to get interesting: expenditure growth in May was bolstered by consumers saving rather than spending as they put their money into NS&I certificates. The impact of one-off factors were largely diminished in June, which saw a strengthening of underlying spending as consumers cautiously returned to the High Street and ‘usual’ spend.

It seems that consumers are becoming increasingly circumspect about what they do with their money.  The challenge for the High Street is to convince consumers their money is best spent with them rather than saved. This is a battle that may well get bloody…

The Huffington Post launches…Yes, HuffPo, as it is affectionately known has launched in the UK. The brainchild of Arianna Huffington who took the US political news market by storm, has set her sights on the UK online media market. Already, questions have been raised – ‘Where is the innovation?’, The Guardian’s digital content blog asked. It’s a fair point, given the work that paper has done in this area, but why change a winning formula?

The jamboree around the launch alone must’ve generated major traffic. Its success will undoubtedly lie in its ability to challenge the online print media for traffic and generate advertising revenue for its owners AOL. Given PoliticsHome’s rapid shift to a subscription model, it will be interesting to see if HuffPo also competes in the political news aggregator space. Certainly, plenty to look forward to and we anticipate the ‘meeja’ watching developments very closely.

It’s also worth also noting the launch today of Dale & Co: ‘a new blogging platform, showcasing 92 writers, each with editorial independence, providing some of the best political, media, social and sports commentary on the net’. This may provide the real competition for Huffington Post UK given Iain Dale’s profile as a commentator in political and media circles.

FaceSkype…This week, Facebook announced an interesting partnership with Skype, which the latter’s CEO, Tony Bates, considers as “the most important strategic relationship”. Is this yet another reason for us spend more time behind the digital wall or does it really bring the opportunity for video chat to go truly mass market?

Facebook picked up another partner this week, which will make distant friends & family happy

Apart from being extremely useful to keep in touch with those that live on the other side of the world this might just fuel the demise of a simple face to face coffee in Starbucks and with over 750 million active users this is looking more and more likely. We can safely say then that Facebook is the current big winner of the social network fight!

One country which isn’t jumping on the Facebook / Skype bandwagon is the UAE. Surprisingly Skype is not legally licensed in the UAE – quite remarkable coming from one of the most technologically advanced countries in the Middle East. Trust Facebook to fuel this debate further as discussions over whether or not this ‘innovate feature’ will actually make it to the forefront of people’s laptops and phones are in the air.

Boris Bonds…A couple of weeks back, we wrote about the Scottish government’s attempts to raise money through their new powers to issue ‘braveheart bonds’. Now it seems, it’s the turn of the Greater London Auhtority, which plans to issue £600m worth of bonds to pay in part for CrossRail.

Crossrail - the GLA are digging a big hole in the ground while trying to avoid a big hole in their budget

Paying for any kind of public works project at the moment is tricky. Raising enough money to pay for a £17bn construction programme is therefore at the very tricky end of tricky. As Anthony Hilton noted though, the move by the GLA and Lloyds, who will act on their behalf, could be a masterstroke and a template for future fundraising efforts by local authorities as austerity cuts really start to bite.

PIGS or PIGI…Greece, as we know, is in serious trouble. This week Portugal looked like it was being lined up to be the next to fall off the wagon as one ratings agency downgraded its debt dramatically. Ireland, we all know about as well. The question is though, who’s next in line?

The conventional wisdom had been that Spain was the next most vulnerable, but now thoughts are beginning to turn towards Italy. As The Econmist noted in a special report last month, in the good times the country has grown less than its peers, and in the bad times has tended to suffer more than its peers. Perhaps its no surprise then that some are starting to question whether investor eyes might be about to turn on it.

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