As the summer packed with sporting events kicks off, UAE retail investors are making strategic moves in their investment portfolios. According to a recent survey by eToro, more than 57% of UAE retail investors are currently invested in discretionary consumer goods, with an additional 59% expressing interest in the segment for the summer. The ongoing ICC Men’s T20 World Cup is expected to have a significant impact on the market, with sports brands potentially seeing a boost in share prices.
eToro’s analysis suggests that the world’s biggest sportswear brands could experience a share price increase during the busy summer seasons, based on past trends. In summers like 2016 and 2021, the value of these firms rose between 11-12% from June to August, outperforming major stock market indices. Major global sporting events during these times provided exposure for the sports brands, leading to increased sales and market value.
With the recent launch of the Nike Well Festival in Dubai and the announcement that the UAE will host the Games of the Future 2025, the national sports landscape is poised for growth. The region is also gearing up for upcoming sporting events such as UFC Fight Night, NBA Abu Dhabi Games 2024, and UFC 308. The positive outlook for sports events in the UAE indicates a favorable environment for sportswear brands to thrive.
Despite a relatively poor performance in recent years, sportswear brands collectively returned just 18% to shareholders in the last five years, compared to the S&P 500’s 88%. However, there have been variations among the companies, with winners and losers in the basket of stocks. Brands like Adidas and Under Armour have seen different levels of value decline, while luxury brands like Lululemon and Asics have enjoyed healthy share price gains.
eToro Analyst Sam North emphasizes the potential for sportswear brands to capitalize on the exposure from events like the Euros and the Olympics to boost sales and share prices. The hope is that the significant sponsorships invested by these firms will translate into increased consumer spending on sports apparel and equipment. The upcoming months present an opportunity for these brands to recover from a stagnant performance and post-pandemic challenges.
North also notes that the current market conditions favor a potential rally for sportswear brands, as inflation eases and consumer spending power increases. The stocks are trading at a near-bottom range of 24 x P/E valuation ratio, making them undervalued. Companies like Acushnet and Asics have been performing well, rewarding shareholders with triple-digit returns. As the summer of sporting events unfolds, the spotlight on sportswear brands and their potential for growth remains a key focus for investors and enthusiasts alike.
