Why the stock market is rooting against Brazil in the World Cup

. Jun 28, 2018
brazil stock market world cup Stock market operator is losing money due to the World Cup
brazil stock market world cup

Stock market operator is losing money due to the World Cup

If data analysts are right, then Brazil should be preparing to sew a sixth star on its football uniform. Simulations run by Goldman Sachs give Brazil an 18.5 percent chance of winning this year’s World Cup title. Brazil is also the favorite for data analysis site FiveThirtyEight.

Here’s how FiveThirtyEight reached its conclusion and made Brazil the favorites (countries in red have already been eliminated from the tournament):

World Cup predictions brazil

But if that prediction were to come true, at least one group of people in Brazil would not be ecstatic: stock market operators. That’s because World Cup matches are like holidays in Brazil – taking operators away from their desks and drastically reducing the amount of money traded in the country.

</span></p> <p><span style="font-weight: 400;">As an example, let&#8217;s take Brazil&#8217;s last game, against Serbia, on June 27, at 3 pm local time. Banks, notary offices, and most public institutions closed their doors at noon (or 1 pm at the latest) so workers could go home or meet their friends to watch the game. If you&#8217;ve ever been in Brazil during a match of the men in yellow shirts, you&#8217;ll have noticed just how empty the streets get. Everybody is inside, watching the game &#8211; and apart from servers in bars and restaurants, little work is done during those 2 hours.</span></p> <h3>Less money is being traded</h3> <p><span style="font-weight: 400;">Unlike in previous editions of the World Cup, B3 (the company that operates São Paulo&#8217;s trade market) has not interrupted its activities during Brazil matches. And it makes sense: while the national team is playing football, Petrobras continues producing oil, consumers continue to demand credit, and cargo continues to be transported (when <a href="">truckers are not on strike</a>, at least).</span></p> <p><span style="font-weight: 400;">But while it is possible to trade, it doesn&#8217;t mean that there will be any operators working. And that drastically reduces the liquidity of actions &#8211; increasing the risk of a higher gap between the price at the execution of orders and the amount effectively sold. </span></p> <p><span style="font-weight: 400;">So far, Brazil has played three times in the World Cup &#8211; with the two last matches happening during business hours: on June 22 at 9 am against Costa Rica, and the Serbia game, on June 27 at 3 pm. During those days, the traded volume in B3 dropped by 47 and 40 percent, respectively. </span></p> <p><span style="font-weight: 400;">During the Costa Rica game, B3&#8217;s volume of trade reached BRL 6 billion, while the estimated revenue was BRL 3.1 million &#8211; that is, a loss of roughly BRL 2.4 million when compared to the stock market operator&#8217;s average revenue of BRL 5.5 million. </span></p> <hr /> <p><span style="font-weight: 400;"><img loading="lazy" class="alignnone size-large wp-image-5404" src="" alt="stock market world cup" width="1024" height="278" srcset=" 1024w, 300w, 768w, 610w, 1180w" sizes="(max-width: 1024px) 100vw, 1024px" /></span></p> <hr /> <h3>How much more will B3 lose?</h3> <p><span style="font-weight: 400;">Prior to the beginning of the World Cup, online statistics, market research, and business intelligence portal Statista published a chart showing major urban centers where the football tournament threatens productivity the most. In São Paulo, for example, 64 and a half working hours overlap World Cup games.</span></p> <hr /> <p><span style="font-weight: 400;"><img loading="lazy" class="alignnone size-full wp-image-5401" src="" alt="stock market world cup" width="960" height="684" srcset=" 960w, 300w, 768w, 610w" sizes="(max-width: 960px) 100vw, 960px" /></span></p> <hr /> <p><span style="font-weight: 400;">Of course, assuming that Brazil reaches at least the semifinals, only 6 of those hours will represent a &#8220;break in productivity.&#8221; The third-place play-off and the final happen during the weekend &#8211; so they won&#8217;t have a direct impact on the stock market.</span></p> <p><span style="font-weight: 400;">Overall, if the Brazilian team lives up to expectations, B3 is set to lose an additional BRL 6 million by the end of the tournament &#8211; totaling BRL 9.5 million in losses between June and July.</span></p> <p><span style="font-weight: 400;">But if you&#8217;re an investor, don&#8217;t worry. B3&#8217;s operational revenue between January and March totaled BRL 1.2 billion. So, these losses represent 2.7 percent of the company&#8217;s total revenue, which doesn&#8217;t jeopardize the company&#8217;s financial health. Still, is hard to imagine financial market operators being happy to swallow such losses.

Read the full story NOW!

The Brazilian Report

We are an in-depth content platform about Brazil, made by Brazilians and destined to foreign audiences.

Our content is protected by copyright. Want to republish The Brazilian Report? Email us at