Can you trade the Winter Olympics? Here’s what we found

Every four years, the world gathers to watch a specific breed of crazy.

Athletes hurl themselves down ski hills at 100-plus km/h. They launch off icy ramps. They slide through frozen tunnels in machines that look like failed engineering experiments.

From the warm embrace of my fireplace, I’m glued to the screen watching professional risk-taking masquerade as sport.

But as a curious investor, it sparked a frosty question: Can one actually profit from the Winter Olympics? 🤔

Markets love a theme - the “TACO trade", the Japan trade, the precious metals trade. So is there such a thing as a “snow trade"? So for a bit of fun, I climbed through a proverbial mountain of research and crunched some numbers. 

Here’s what I found.

#1 - The “buy the host” strategy

Academic research is mixed, but much of it examines the host country’s market and whether specific sectors benefit from higher economic activity and government contracts tied to the Games.

A paper titled Gold, Silver, Bronze or Tin? The Short and Long Term Effects of Mega Sporting Events, published by KAIST Business School, found that the impact depends on the event.

Summer Olympics announcements showed a statistically significant positive market reaction when a host country was selected, with its stock market rising gaining about 2% within a few days.

And true to form, the ASX 200 did rise just about 2% in the days after Brisbane was confirmed as host of the 2032 Summer Games in July 2021; from 7,308 points to as much as 7,447 in the three trading sessions after the announcement.

Winter Olympics, however, are a different story. The same research found no statistically significant impact for winter host announcements, and in some cases, even negative reactions for events like the FIFA World Cup.

That said, there are exceptions. A study published in the Journal of Sports Economics - titled Who Benefitted From the PyeongChang Olympic Announcement? - found that South Korea’s KOSPI Index recorded a peak abnormal return of 3.8% in the 15 trading days after winning the 2018 Winter Games.

Gains were led by financial and IT stocks, which investors viewed as likely beneficiaries of increased lending for venue construction and the digital infrastructure required to stage the event.

#2 - The “buy the sponsor” strategy

The next logical idea is to buy the companies most visibly associated with the Olympics.

Companies like Visa and Coca-Cola have been Olympic sponsors for decades, while a newer cohort including Alibaba and Airbnb have joined the mix more recently. These brands dominate the broadcasts, the stadium signage and the global marketing push. If anyone should benefit from the Olympic halo effect, surely it’s them.

There was little formal measurement of how these stocks perform during or ahead of the Winter Games, so we decided to cut our own data. The results were surprising!

At first glance, the numbers look compelling. But the real question is this: are these stocks rising because of the Olympics - or because of broader market forces?

A 2024 paper published in the Management Science Journal, titled Media Attention and Event-Based Grouping of Stocks: An Examination of Stocks Hyped by Media Outlets as Benefiting from the Olympics, examined what researchers call “event-based grouping.”

It found no evidence of abnormal profitability or growth for Olympic firms during the Olympic period.

“The results suggesting that there is no major impact on underlying fundamentals for Olympic stocks may seem surprising… the incremental money earned from the Olympic Games is likely to be small for many of the Olympic stocks,” the authors wrote.

#3 - The “buy the champions” strategy

Instead of trading the event, what if the more investable idea is to look at the countries that consistently dominate it? Here’s the all-time Winter Olympic medal table, courtesy of Topend Sports:

• Norway - 405 total medals
• United States - 330 total medals
• Germany - 286 total medals

Notably, they are all developed market powerhouses - backed by resilient economies and solid long-term market performance. Let's look at the returns and how Australian investors can invest in them.

🥇 Norway

Just as Norwegian athletes dominate cross-country skiing, ski jumping and the Nordic combined, Norway's equity market is concentrated in energy, shipping and industrials - sectors exposed to global commodity prices and capital spending cycles.

In USD terms, the MSCI Norway Index has delivered: 1 year: +36.77% | 5 years: +11.16% p.a. | 10 years: +9.95% p.a.

Global X’s U.S. office makes the case for Norway:

“Norway's energy resources and political stability position it for long-term growth as geopolitical tensions disrupt global oil and gas supplies, making Norway a reliable and attractive energy provider,” it says.

Ways to play it:

• Global X MSCI Norway ETF (NYSE: NORW) - provides exposure to Norway’s largest listed energy, industrial and materials companies and be accessed by Australian investors with international trading accounts.

🥈 United States

The U.S. sits second on the Winter medal table but remains the undisputed heavyweight in global capital markets. 

The diversity of its medal haul - spanning speed skating, figure skating and curling - mirrors the breadth of its equity market, from technology and healthcare to financials and global consumer leaders, all backed by deep capital markets and global revenue streams.

In AUD terms, the S&P 500 has delivered: 1 year: +17.88% | 5 years: +14.42% p.a. | 10 years: +14.82% p.a.

For Australian investors, it remains one of the simplest ways to diversify beyond a banks-and-miners-heavy local market.

Ways to play it:

• iShares Core S&P 500 ETF (ASX: IVV) – tracks 500 of the largest U.S. companies.
• Betashares S&P 500 Equal Weight ETF (ASX: QUS) – offers equal-weight exposure, reducing concentration in mega-cap tech.

🥉 Germany

Germany rounds out the podium. Much like its dominance in the luge, Germany’s economy is built on precision engineering and industrial strength.

In USD terms, the MSCI Germany Index has delivered: 1 year: +26.70% | 5 years: +9.37% p.a. 10 years: +8.78% p.a.

Global X’s Trevor Yates makes the case for Germany:

“A political shift in the country, cemented by recent federal elections, is likely to drive key policy initiatives, which could lead to structural energy, tax, and fiscal reforms. We believe that such reforms could unlock sustainable growth and be a potential catalyst for German stocks,” it says.

Ways to play it:

• iShares MSCI Germany ETF (NYSE: EWG) - provides direct exposure to Germany’s largest industrial and export-driven companies. Accessible to Australian investors with international accounts.
• iShares Europe ETF (ASX: IEU) – offers diversified exposure across major European markets, with ~15% weighting to Germany.

❄️ So, what’s the lesson?

After looking through the research and running the numbers, there isn’t a clean, mechanical “snow trade.”

Buying the host can work. It needs to be selective. It needs to be quick. And it needs to be viewed in the context of the broader market cycle.

Buying the sponsors can look compelling. But more often than not, these are simply high-quality global businesses that tend to associate themselves with major events. That alone can be a useful hunting ground for stock ideas.

The most compelling takeaway, however, may be broader index exposure. The countries that consistently dominate the Winter Olympics often invest heavily in infrastructure, innovation and competitive advantage. That same economic edge can show up in long-term equity returns.

The Games may not create the trade.

But they can point you toward it, and offer diversification in return!