Play Rio 2016 Olympics With These Stocks & ETFs

Finally, it’s the day for the opening ceremony of the 2016 Summer Olympics. The event will take full control of sports lovers all over the world till August 21. And it isn’t only sports lovers who are excited about such big events, these also mean a lot for the economy of both the core country and all over the world. So, we have a game plan for investors who are on their mark to get set and go to strike gold.

For the coming two weeks, sponsors of the event will take full charge of your television and radio, put up hoardings and try any means of advertisement to promote their brands, definitely within the rules set by International Olympic Committee (IOC).

Moving a little forward, companies that are into the tourism sector will also be in focus due to this event, as athletes, event organizers and most importantly spectators around the world will gather in the hosting country Brazil’s Rio de Janeiro. So, this sporting extravaganza will have a substantial impact on several companies and their related ETFs.

Below we highlight the stocks and ETFs that can benefit from this event.

Consumer

The list of Olympic partners include big consumer stocks like Coca-Cola (KO - Analyst Report) , McDonald's (MCD - Analyst Report) , The Procter & Gamble Company (PG - Analyst Report) . As a result, consumer ETFs like Consumer Staples Select Sector SPDR Fund XLP, Fidelity MSCI Consumer Staples Index ETF FSTA and Vanguard Consumer Staples ETF VDC will benefit from their considerable exposure to PG and KO. Investors can also bet on PowerShares Dynamic Leisure and Entertainment Portfolio ETF PEJ to gain exposure to a full array ofleisure stocks including MCD.

Media & Telecom

As followers of the event will stay updated on it through television and newspaper, media stocks should shoot up during the event. So, investors can definitely take a look at the media ETF PowerShares Dynamic Media Portfolio PBS.

Comcast Corp’s (CMCSA - Analyst Report) NBCUniversal unit will “air live over 6,000 hours of competition on TVs and mobile devices from the Rio Olympic Games.” So, Comcast-heavy ETFs like Consumer Discretionary Select Sector SPDR Fund XLY will also be in focus.

Telecom ETFs like Fidelity MSCI Telecommunication Services ETF FCOM and Vanguard Telecommunication Services ETF VOX will also likely to benefit as AT&T (T - Analyst Report) and Verizon (VZ - Analyst Report) joined hands with NBCUniversal to offer coverages of Olympic events.

Internet & Social Media

But television and newspaper are no longer the only sources of information. Today, people all over the world are virtual participants of any event thanks to social media. And if the event is as major as Olympics, then social media stocks like Facebook FB and Twitter TWTR should be pretty psyched up

Goes without saying, the pure play social media ETF Global X Social Media Index ETF SOCL will have every reason to surge ahead. Also, excessive usage of search engines will draw investors’ attention to Internet ETFs like First Trust Dow Jones Internet Index Fund FDN and PowerShares NASDAQ Internet Portfolio ETF PNQI (read: ETFs to Gain as Amazon Crushes Q2 Estimates).

Tourism

Demand for hotels, airlines, food and drinks will keep tourism and entertainment stocks charged up. During the FIFA World Cup 2014, Brazil saw a considerable surge in foreign tourists from the year-ago period. This in turn resulted in almost 60% year-over-year higher spending by tourists during the event.

Though this time the outbreak of the Zika virus in Brazil is weighing on ticket sales, a decent surge in tourism is still expected. As a result, airlines stocks and the ETF US Global Jets ETF JETS should gain some traction on higher passenger load factor.

Several hotel stocks including Marriott International Inc. (MAR - Analyst Report) and Hyatt Hotels Corporation (H - Snapshot Report) will likely benefit from this global multi-sport event. So should the ETF PowerShares DWA Consumer Cyclicals Momentum Portfolio PEZ which invests, albeit moderately, in Hotels, Restaurants & Leisure.

Brazilian Stocks & ETFs

As per a recent article published in MarketWatch, FactSet data showed that “since the 1984 Los Angeles games, six out of the eight summer Olympics host countries saw an increase in value in their local stock market index during the games.” It seems that Brazil is no exception. This is because, despite Brazil’s economic and political issues, Brazilian stocks and ETFs are on a tear lately (read: Is Summer Olympic 2016 a Boon to Brazil ETFs?).

The event is expected to have a considerable impact on smaller-cap companies which are mainly tied to the domestic economy. A Ministry of Tourism study revealed that “a turnover of $64.6 billion and creation [of] 115,000 jobs across the country” will likely be realized from the event. Also, “out of nine surveyed sectors, seven are estimated to grow in sales this year.”

As per that study, car rental companies will be one of the largest beneficiaries with estimated sales growth of 9.6% followed by inbound tourism (8.3%), road transport (6.6%) and lodging facilities (5%).

However, many believe that this time the benefit is not expected to be great for Brazil as about ‘28% of tickets were still available as of July 20’. Zika virus has a lot to do with this. Still, investors should note that iShares MSCI Brazil Small-Cap EWZS and VanEck Vectors Brazil Small-Cap ETF BRF generated over 30% returns in the last three months (as of August 3, 2016). Large-cap ETF iShares MSCI Brazil Capped (EWZ - ETF report) was also not too behind as it gained about 17% in the same timeframe.

Other Stocks & ETFs

There are several other U.S. and global sponsors of Rio Olympic that set to gain ahead benefitting the ETF world too. These are –

Samsung– one of the Olympic partners – with 22.9% weight in iShares MSCI South Korea Capped ETF EWY.

Dow Chemical Co (DOW - Analyst Report) – another partner – which will boost materials ETFs like iShares Edge MSCI Multifactor Materials ETF MATF and iShares U.S. Basic Materials ETF IYM with over 10% exposure.

General Electric Co (GE - Analyst Report) – yet another partner – brings industrial ETFs including iShares Edge MSCI Multifactor Industrials ETF INDF and Fidelity MSCI Industrials Index ETF FIDU in the spotlight.

Cisco (CSCO - Analyst Report) which is an official supporter of the Olympics has substantial weight in iShares North American Tech-Multimedia Networking ETF IGN.

Disclosure: None.

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