Bored of the eurozone crisis? | FT Alphaville

Bored of the eurozone crisis?

So too is the ECB, clearly.

Enjoy, or complain to your Euro MP.

c.c. Daily Mail news desk


At  the   2010   FIFA  World  Cup  in  South Africa, many soccer matches were played during stock  market  trading  hours,  providing  us  with  a  natural  experiment  to  analyze  fluctuations  in investor  attention.  Using  minute‐by‐minute  trading  data  for  fifteen  international  stock exchanges, we present three key findings. First, when the national team was playing, the number of  trades  dropped  by  45%,  while  volumes  were  55%  lower.  Second,  market  activity  was influenced by match events. For instance, a goal caused an additional drop in trading activity by 5%. The magnitude of this reduction resembles what is observed during lunchtime, and as such might not be indicative for shifts in attention. However, our third finding is that the comovement between  national  and  global  stock  market  returns  decreased  by  over  20%  during  World  Cup matches, whereas no comparable decoupling can be found during lunchtime. We conclude that stock markets were following developments on the soccer pitch rather than in the trading pit, leading to a changed price formation process.