Less bets from retail investors this World Cup - analysts

The World Cup season has traditionally been associated with high betting and has attracted retail investors from the stock market to channel their funds to this activity.

However, according to stockbroking company Inter Pacific Securities Sdn Bhd head of research, Pong Teng Siew, the pattern is less visible in the current World Cup.

"Retail participation in the market has been low since last November, and the retail market has been very cautious in the market as valuations have become demanding," he said.

He said there will be some interest diversion among the retail market from the stock market during the World Cup season but he expects it to not be significant.

"Disposable incomes have been affected as a result of subsidy rationalisation and has eaten into the portion of monies that gamblers have.

"This will also have a telling effect on the betting activities of retailers during the World Cup," said Pong.

He also said the normal spending which is normally associated with the World Cup has not been observed this time around and this was evident with the lower advertising cost spent.

Pong observed that retail investors had become more savvy in their style of investing. Previously, they would just punt on a stock and follow the 'herd mentality' but now, they would actually study the fundamentals of the company and its financial performance.

"As a result, I don't see a great shift in retail investors allocating their funds to football betting in the ongoing World Cup," he said.

There was a general trend of investors selling in the month of May due to the so-called "May effect" so it would be difficult to attribute lower trading volumes in June to the World Cup, said Pong.

He said the retail portion of the trading volume stood at around 50 to 58 percent at the end of last November.

TA Securities Sdn Bhd remiser, Bhajan Singh said the World Cup season witnesses the interest of retail investors subside in the market.

"There is a specific segment in the retail market which will punt in World Cup games.

"I can't recall the exact impact to retail, mostly it is the general sentiment – lack of interest in trading in stock market for that particular month," said Bhajan.

He admitted that retail participation in the stock market was generally weak and the interest is expected to wane further with the World Cup.

The World Cup does have an impact to retail investors but the jury is out on its exact impact as the quantum cannot be ascertained.