World Cup Soccer's Economic Impact on Japan + Stock Plays (HIT, KNBWY, MC, NIPNY, NTT, SNE)

by: Steven Towns

Japan's Dentsu Inc., a globally recognized advertising and market research firm has just released a survey of the impact the upcoming FIFA World Cup Soccer (Germany) will have on the Japanese economy. Any investor in Japan and especially in consumer electronics, will find plenty of reasons to be happy about estimated direct consumer spending of 224.1 billion yen (US$1.91b at Y117.25/US$1) and total economic impact estimated at 475.9 billion yen (US$4.06b). Think about the impact the Super Bowl has on consumer spending in the U.S. and then consider that the World Cup lasts an entire month from June 9th to July9th!

Extract from Dentsu's survey:

In addition to further stimulating already buoyant sales of DVD recorders and thin-screen televisions, which are making deep inroads into the household market, the 2006 FIFA World Cup Germany™ is strongly expected to provide a broad-based economic impact in Japan across many areas of the economy including manufacture of parts and components, distribution and service industries.

If the Japanese national team were to make it through to the tournament Semi-finals or Final, the excitement induced across the entire country would further magnify the economic impact. In such a case, the total economic impact would grow to 546.1 billion yen, or 70.2 billion yen more than otherwise.

See page 2 of this link to Dentsu's press release of its market impact survey, which shows the breakdown of spending and production figures.

The easiest way to play the World Cup Soccer effect and the recovering Japanese economy is to consider the low cost and very liquid iShares MSCI Japan Index ETF (EWJ). Another way is to look at the Dentsu estimates and consider corresponding ADRs. For instance, for thin-screen televisions, there is Matsushita-Panasonic (MC), Sharp (, and Sony (SNE). Computer plays include the same as those for TVs plus Hitachi (HIT) and NEC (NIPNY). Matsushita-Panasonic, Sharp , and Sony offer DVD recorders. For new high-speed Internet subscribers NTT (NTT) is a competitive play.

Lastly, don't forget the important ingredient that helps make the games even more enjoyable. Have you guessed it already? How about some Kirin (KNBWY) beer? Both the alcoholic and non-alcoholic beverage industries are fiercely competitive in Japan as one would expect. However, Kirin Brewery is about as good they come as it battles long-time rival Asahi (Tokyo: 2598) for the #1 spot. Sales are said to be strong of a relatively new to market “third-category beer,�? a type of beer made of various ingredients including peas, soybeans, and corn, but not malt; which is taxed at a lower rate than regular beer.