"Beware the investment activity that produces applause; the great moves are usually greeted by yawns" Warren Buffett
Holding mass international events is always focused attention from the world business community. Even before the events begin, the attention of various investment and banking institutions will be activated in order to become part of a global project. The football World Cup, the Olympic games, International cultural festivals and other competitions and so on – all this serves as a qualitative and fairly rapid economic impetus to the development of both the country as a whole and for business groups. But is everything as bright and colorful as we all think? We will look at the events that in some cases successfully, and in some not very, which played on the quality of the investment climate, as well as what exactly serves the development of the investment industry in the period of global events. Especially now, when it is so important in connection with the World Cup in Russia.
South Africa hosted the 2010 FIFA world Cup, spending a total of about $ 4.5 billion on the modernization of stadiums and transport infrastructure. By creating some 25,000 new jobs, the country has made progress in development, but ... only for a short period of time. All jobs disappeared at the end of the project, as did the additional hotels and stadiums built, which are empty and "sitting idle", as the South African Republic failed to maintain the level of tourism that it experienced during the tournament. In addition, the result of the construction of the stadiums was not sustainable, as annual maintenance costs could not be compensated by sailing tickets.
Having invested more than $ 40 billion in infrastructure and upgrading of Beijing, we can already say that China has achieved the attraction of even more tourists, in particular, business tourists. The Olympics brought long-term prospects to China, achieving two important goals: 1) creating an attractive image of the state and its capital, and 2) economic growth. During the Games, China was visited by about 600 thousand foreign guests and 2.5 million Chinese tourists. According to Chinese Business Review magazine, the annual increase of tourists after the Olympics is 8-9% for 2018. Even before the construction of the facilities began, the Chinese government allowed foreign investors to open their own hotels and travel companies in China in order to attract new investments. These steps paved the way for the broad expansion of foreign hotels and other tourist sites. Naturally, not everything was so rosy in China at the time of the Olympic games, as we should not forget that 2008 was very difficult in terms of economic and social upheaval for the Chinese because of the heavy load in the form of the Olympics.
These examples show that economic growth and attracting investments with proper management and point investments is possible. However, Reuters business analysts describe this growth as a «short-term impact on the host economy." And by and large, they are right. Interestingly enough, the U.S. Bank Goldman Sachs found that since 1974, all the winners of the World Cup (except one) have exceeded all economic expectations, attracting a large number of investors and showing economic growth a month after the final match. Who will be able to predict the winner before the start of the tournament to become the first investment partner for a greater share of the benefits? He is obviously clairvoyant!
So, given all this, does the world Cup or any other world-scale events have to be something for you to make some sort of investment decision? I'll leave it to your thoughts.
The record was published - 28.06.2018