Spain/Netherlands: Looking at 'World Cup Effect' in ADRs & ETFs (SNF, EWP, BBVA, STD, REP, TEF, EWN, PHG)

Chances are good that you have heard of trading theories such as “The January Effect,” “The Super Bowl Effect,” and even the “Sell in May and Go Away!” trading strategies.  What about the “World Cup Effect?”….  Yesterday, or last night if you were in Europe, came the victory of Spain over The Netherlands in a 1-0 victory in the World Cup Finals.

While this certainly has no FIFA endorsement, there seems to be more of an “Anti-World Cup Effect” that took place the day after Spain’s Victory.  The ETFs and ADRs of Spain are all lower, with some mixed results in the Netherlands.

Our technical analysis affiliate, Adam Hewison of INO, is looking at the odds of a dollar index rally.  That always throws in a curve ball for ADR analysis.

We are watching the moves in The Ibero-America Fund, Inc. (NYSE: SNF), iShares MSCI Spain Index (NYSE: EWP), Banco Bilbao Viscaya Argentaria (NYSE: BBVA), Banco Santander, S.A. (NYSE: STD), Repsol YPF SA (NYSE: REP), and Telefonica SA (NYSE: TEF).  The moves are as follows today:

• The Ibero-America Fund, Inc. (NYSE: SNF) $5.58, down 0.10;
• iShares MSCI Spain Index (NYSE: EWP) $36.83, down $0.57;
• Banco Bilbao Viscaya Argentaria (NYSE: BBVA) $12.02, down $0.19;
• Banco Santander, S.A. (NYSE: STD) $12.49, down $0.25;
• Repsol YPF SA (NYSE: REP) $22.20, down $0.19;
• and Telefonica SA (NYSE: TEF) $61.10, down $0.56.

And the losing nation, The Netherlands, is seeing the same… iShares MSCI Netherlands Investable Market Index (NYSE: EWN) is not trading any better. It is down $0.10 at $18.53 on only about 68,000 shares.  The standout name in ADRs today is Koninklijke Philips Electronics NV (NYSE: PHG), or Philips Electronics, with a gain of 0.2% to $31.95 for its ADRs today.

Bloomberg noted about a month ago that investors should sell the markets of the nations that were eliminated from the World Cup the day after their losses.

The problem that makes this victory’s conundrum may be a rather simple explanation.  Office betting pools are huge distractions around the Super Bowl for American football in the U.S.  Spain is not exactly known for its workforce having the greatest of work ethics as far as its population is concerned.  Imagine if the U.S. had a game where just about everyone in the country was rooting for the team… the time loss and productivity loss would be enormous.  Spain has had weeks of this distraction, and there are probably more than just a few hangovers in Spain which may last longer than just today (in the Netherlands too for that matter).

With the Dollar/Euro at $1.2595 today, maybe some eyes are still on the currency markets.  It seems that in the world of ADR investing, both sheep and PIIGS get slaughtered.

JON C. OGG