Rio Summer Olympics expected to boost shares in televisions, beer

With just three days until the Summer Olympics officially kick off in Rio de Janeiro, attention is turning not just to the performance of athletes but also of stocks related to the world’s biggest sporting event.

Funds with investments in Brazil have seen rising profits in the lead-up to the Games, and market experts expect stocks in beer and televisions to benefit from the Olympics.

According to KG Zeroin, which evaluates fund investments, the best performance last month among funds investing in overseas markets and managing more than 1 billion won ($900,000) came from those investing in Brazil. They reported an average profit rate of 8.33 percent.

This was followed by health care funds at 6.99 percent and funds investing in Germany at 6.39 percent.

Market experts say Brazil’s stock markets are doing particularly well since global investors that were stunned by Britain’s vote to leave the European Union in June have been returning to riskier investments as the referendum’s impact has been quickly abating.

Although the Brazilian economy continues to struggle with a negative growth rate and insolvent bonds, global commodities prices have been stabilizing, a positive sign for Brazil, and global investors have been focusing more on emerging markets as the U.S. Federal Reserve has been postponing their interest rate hike.

During the Olympics, stocks related to watching the Games are also expected to see an increase, according to an LIG Investment & Securities report released Tuesday. Beverage, media and electronics manufacturers are likely to enjoy a rise in their share values during the Summer Games.

“Unlike the 2014 FIFA World Cup in Brazil, sporting events like volleyball, swimming, rhythmic gymnastics and golf are scheduled to take place when Korean viewers can watch live,” said Kim Ye-eun, an analyst at LIG Investment & Securities. “If the Korean athletes perform well, some of the related industries will see their revenue increase.”

The companies likely to benefit include Samsung Electronics, LG Electronics and LG Display for their TVs; Hite Jinro and Lotte Chilsung for beer; GS Retail for lights snacks and beverages including beer; Halim Holdings for chicken; and Cheil Industries for advertising.

“These companies in the past actually saw their revenue and operating profits improve in the second and third quarters when major summer sporting events like the Olympics and World Cup were held,” Kim said.

During the previous Olympics held in London in 2012, the Kospi rose 5.6 percent while Samsung Electronics, LG Electronics and LG Display saw an increase in their share values. Samsung Electronics rose 7.5 percent, LG Electronics went up 6.8 percent and LG Display surged 9.8 percent.

But the analyst noted such benefits will be limited largely because of the 12-hour time difference with Brazil. During the 2014 World Cup, for example, many of the football matches that included the Korean team were held after midnight or in the early morning, which did not help boost sales of beer and chicken on the level seen during the 2002 World Cup, when it was jointly hosted in Korea and Japan.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]