SOURCE: Russell Investments

Russell Investments

July 24, 2012 09:57 ET

Russell Indexes: Olympic Games Excitement Does Not Always Translate to Host Country or Global Equity Market Performance

SEATTLE, WA--(Marketwire - Jul 24, 2012) -  Russell Global Index returns suggest no significant direct market benefit to the host country or the global markets around the time of the Summer Olympic Games.

"As expected, economic and market fundamentals are the dominant drivers of equity market performance, the past three Summer Olympic host countries are no exception," explains Stephen Wood, Russell Investments' Chief Market Strategist. "Additionally, while the three most recent Summer Olympic hosts have had large economies, their market capitalization represented a relatively small portion of the overall Russell Global Index and therefore does not have a proportional impact on global market performance."

Russell Indexes examined returns for each host country for the month prior to, during and after each Olympic Game relative to the Russell Global Index and U.S. Russell 3000 Index. Australia showed a slight increase in relative returns following the Olympics it hosted in 2000, which Wood believes that is likely due to Australia's relative technology underweight as the tech bubble began to burst. Greece also experienced positive performance following its host duties in 2004, but this was still much less than the increase seen in the rest of Developed Europe during this period. And China's decline following its host duties in 2008 can be linked to the beginning effects of the global financial crisis and its impact on the global economy. 

"If investors expect the Olympics to generate a major effect on the equity markets of the host country (or the world markets) around the time of the games, we don't see a significant, lasting relationship as reflected in the Russell Indexes," continues Wood. "Investors should focus on more fundamental factors, rather than Olympics, when planning a global, multi-asset investment strategy."

Summer Olympics 2000 in Sydney, Australia
September 15 through October 1, 2000

Russell Indexes August September October November
  Russell 3000 Index 7.42% -4.53% -1.42% -9.22%
  Russell Global Index 5.08% -4.97% -2.50% -7.27%
  Russell Asia Pacific Index 4.47% -6.41% -7.91% -2.33%
  Russell Australia Index 0.80% -6.32% -2.50% 4.95%

Summer Olympics 2004 in Athens, Greece
August 13 through August 29, 2004

Russell Indexes July August September
  Russell 3000 -3.78% 0.41% 1.54%
  Russell Global Index -3.35% 0.57% 2.46%
  Russell Developed Europe Index -2.77% 0.11% 4.16%
  Russell Greece Index -2.47% 0.73% 2.89%

Summer Olympics 2008 in Beijing, China
August 8 through August 24, 2008

Russell Indexes July August September
  Russell 3000 Index -0.80% 1.55% -9.40%
  Russell Global Index -2.48% 10.30% -0.46%
  Russell Greater China Index -1.70% -4.92% -20.24%

Source: Russell Investments

The Russell Global Index includes more than 10,000 securities in 48 countries and covers 98% of the investable global market. All securities in the index are classified according to size, region, country and sector. Daily Returns for the main components are available here:

Please note: Indexes are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Russell's publication of the Indexes or Index constituents in no way suggests or implies a representation or opinion by Russell as to the attractiveness of investing in a particular security. Inclusion of a security in an Index is not a promotion, sponsorship or endorsement of a security by Russell and Russell makes no representation, warranty or guarantee with respect to the performance of any security included in a Russell Index.

Investment in utilities issuers is subject to various risks, including governmental regulations, high interest costs associated with capital construction programs, costs associated with environmental regulation, the effects of economic slowdown and surplus capacity, competition from other providers of services and other factors.

Returns provided are US dollar-denominated.

Opinions expressed by Dr. Wood reflect market performance and observations as of July 23, 2012 and are subject to change at anytime based on market or other conditions without notice. Please remember that past performance does not guarantee future performance.

Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.

"The Olympics" is a registered trademark of the International Olympics Committee.

Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company.