Tokyo, Japan, will be competing against Istanbul, Turkey, and Madrid, Spain, to host the 2020 Olympic Games. The winner will be selected by the International Olympic Committee (IOC) on September, 20, 2013. These three short-listed candidates have 15 months to lobby for votes and impress the committee. This is Tokyo's second bid to host the Olympic Games and they are already a favorite. Tokyo has put aside 400 billion yen to ensure funding and would build 20 new venues to accommodate the event. Doha, Qatar, and Baku, Azerbaijan, were recently dropped from the list of applicants. The IOC determined that Baku's infrastructure and experience were not sufficiently developed at this point in the process.
The bidding process could pose a great opportunity to speed along Japan's recovery. As they ensure their infrastructure and financing is up to par for the International Olympic Committee, companies such as Nomura Holdings, Inc. (NMR), Mizuho Financial Group, Inc. (MFG), and Kubota Corporation (KUB) will benefit from increased public sector spending. Nomura is an asset management and retail service provider, among other things. The bidding process could pose a significant increase in both of these areas for them. Mizuho owns and operates banks throughout Japan, which will allow them to benefit from the bidding process as well. Kubota manufactures machinery, industrial, and consumer products. Kubota will benefit from any increase in infrastructure. In addition, the iShares MSCI Japan Index ETF (EWJ) provides 100% exposure to Japan, with its top holdings coming from the financial and industrials sector. The MAXIS Nikkei 225 Index ETF (NKY) tracks mostly industrial and tech stocks in the Nikkei 225.
As Japan prepares to show that it has the necessary funding to host such an overwhelming event, Nomura, Mizuho, and EWJ, will all see positive gains through increased financial activity and spending. If Japan is selected to host the 2020 Olympic Games, the increased infrastructure that comes from building new venues and preparing accommodations will create a positive impact for Kubota, EWJ, and NKY. With Tokyo in the running to host the event, Japan will benefit in the short-term and see added long-term potential and growth. As Japan is still struggling to recover from devastating natural disasters, this will provide a boost to the economy in general.
If you already own Nomura, Mizuho, or Kubota, hang onto them. They will bring you positive returns. If you are looking to buy, EWJ and NKY provide ample opportunities for the more risk-averse. Even is Japan is not selected to host the 2020 Olympic Games, the bidding process will bring about great benefits to Japan's economy.