Look who is global brokerages’ favourite to win FIFA World Cup


NEW DELHI: Is Germany too strong to be toppled as soccer world champions? Can Brazil take sweet revenge for its humiliating 7-1 loss in the World Cup final four years ago? Will there be a dark horse this time in Uruguay, Belgium or Poland?

Everybody is catching the football fever. How can big investment banks and foreign brokerages be far behind? In fact, they have thrown their hat into the ring trying to predict the team that will walk away with the Russian edition of World Cup 2018.  ..

From taking help of artificial intelligence to drawing up a qualitative ‘portfolio’ of teams, these institutions are doing everything to pick the ‘winner’ of the biggest sporting event.

Their strategy has a striking resemblance to that of stock investing — Japanese financial major Nomura divided teams into ‘safe havens’, ‘low betas’ and ‘high betas’.

It sees France lifting the Cup at Luzhniki stadium on July 15 even as other save havens — Spain, Brazil and Germany — are strong contenders.

Poland, Uruguay and Denmark are low-betas — the potential dark horses — which may spring a surprise, it said.

In addition, the Japanese major puts countries such as Peru and Senegal in high-beta zone. Odds are against these two teams getting th rough the group stage, but who knows!

In the financial industry, the phrase ‘past performance is not indicative of future results’ remains a golden rule. And football is no different, Nomura said.

“Who would have expected that , that during the World Cup in Brazil four years ago, Costa Rica would win the group ahead of Uruguay, Italy and England? Thus, instead of focusing solely on rankings and building quantitative models around them, we take a broader look at each of the teams and concentrate more on a qualitative bottom-up approach to construct our portfolio,” Nomura stated further.

Goldman Sachs sees probability of Brazil winning the tournament as the highest, followed by France, Germany, Portugal and Belgium.

“France has a higher probability than Germany of winning the World Cup, but its (bad) luck in the draw sees it meeting Brazil at the semi-final stage, and the team may not be strong enough to make it past Seleção,” Goldman Sachs predicted.

“Those looking for a repudiation of Gary Lineker’s observation that football is a simple game; 22 men chase a ball for 90 minutes and, at the end, the Germans win will be disappointed. Germany is forecast to defeat England in the quarter finals on July 7,” the top global brokerage added.

Spain and Argentina, according to Goldman Sachs, are expected to underperform, losing to France and Portugal in the quarter finals, respectively.

The brokerage house was upfront that despite the home run advantage, “Russia just fails to make it through the group stage”.

UBS appears to have soft spot for Germany, but it stopped short of saying the country will win the tournament. It’s assessment is there is no other team with higher odds to lift the trophy than the defending champion.

“The first semi-final, by the way, might again see Brazil being confronted with its nemesis from 2014, Germany. While we hope that the best team wins, we also hope that the outcome is less devastating than last time, when our colleagues in São Paulo were depressed for several weeks afterwards,” UBS said in a note last month.

For Belgium, UBS says, “we even see a moderate possibility that a team might succeed which has not won the competition before”.

Danske Bank picked Brazil while Commerzbank sees Germany lifting its fifth, a Bloomberg report suggested.

Ashish Chopra, Vice-President for research (IT), Motilal Oswal Institutional Equities, eats, drinks and lives football. He cheers for Ronaldo as an individual player and Belgium as a team, but believes Germany is too strong to be displaced.

Germany won the 2014 World Cup.

Chopra says not all 11 players can be Ronaldo or David de Gea, the Spanish goalkeeper. A portfolio of all aggressive or defensive stocks may not be enough to win in the market.

There are many football players who got million dollar deals with re-owned football clubs. Why not devote time to spotting them — read stocks — early on, asked Chopra.

Many a time, the price these clubs pay these players and the performance they deliver later on does not match the hype. Finding a stock at the right value is the key, he reminds you.