World Cup fever giving SE Asian stock markets a headache
World Cup fever giving SE Asian stock markets a headache
Reuters, Bangkok
Southeast Asia's stock markets, struggling to bounce back after being thumped by global economic gloom, now have to take on a new and unexpected rival -- soccer.
Some retail investors in the soccer-crazy region are already offloading shares so they can take a punt on World Cup matches instead, analysts say, and more selling is on the way.
Thailand, where soccer and gambling are national passions, is expected to see the biggest market impact from World Cup fever.
"Given that the Thais are such crazy football fanatics, and at the same time such crazy gamblers, I would expect to see a lot of money redirected, at least temporarily," said Marc Lavoie, head of research at Asset Plus Securities.
Betting is illegal in most of southeast Asia but billions of dollars are still expected to be gambled on the World Cup -- with some 90 percent going through illegal channels.
Thai police were so worried about illegal gambling that they proposed broadcasting World Cup matches to the country with a half-hour delay. The idea was scrapped amid widespread ridicule.
Analysts say because the Thai market is shallow and dominated by retail players, the World Cup effect will be relatively strong. They say many investors treat the bourse as a legalized casino, and will switch from betting on shares to soccer.
"The Thais are pretty heavy gamblers," Lavoie said. "I've seen numbers thrown around of billions -- not baht, but dollars -- possibly being gambled in Thailand."
He estimated that as many as 30 or 40 percent of market participants in Thailand would gamble on the World Cup.
Analysts say the markets most vulnerable to a World Cup sell- off are those where there has been little fresh momentum to drive shares and keep retail investors interested.
"If there's a good enough story in the equity market, you're not going to sell it to bet on whoever's playing whoever. You've got to look at the odds," said Markus Rosgen, chief strategist at ING Barings at Hong Kong.
"If the odds are better in football then clearly you want to be betting on football. But if the odds are better in the market clearly you want to be playing the market. A lot of that depends on whether there's a real theme in the market. If there's no real theme, like in Thailand, people will ask -- why bother?"
Some Asian gamblers have gone to remarkable lengths to improve the odds on soccer gambling. In 1999, two Malaysians and a Hong Kong citizen were jailed along with a British security guard for trying to rig an English soccer match by sabotaging the floodlights for the benefit of an Asian betting syndicate.
Dealers say it is not just Thailand that faces a World Cup sell-off -- Malaysia, Singapore and Indonesia are all vulnerable.
"I've been in this business for over 20 years and every time the World Cup comes along, you can expect the market to be dull because some money will go into syndicated betting," said a senior dealer in Kuala Lumpur. "This is not a prediction. This has been the trend traditionally."
Analysts say the World Cup is not all gloom for shares.
While markets may face selling ahead of the tournament, much of the money is likely to be eventually ploughed back into stocks -- by punters, if they win, and otherwise by the bookmakers who are set to earn vast profits from Asia's craze for gambling.
"One way or another someone is going to make some money," Lavoie said. "And you're going to be left with the same dilemma after the World Cup ends -- what do I do with my cash, stick it in the bank at one percent interest, or go punting again? So you should see a mini-run towards the end of the World Cup."
Lavoie said most of the selling in Thailand would be over by the time the contest begins -- and then it could be time to buy.
"What we're telling people is there won't be a sell-off during the World Cup, the sell-off is happening right now and will continue up until the World Cup," he said.