All World Cup bookies stand down… UBS has this one.
With less than a month to go for the 2018 FIFA World Cup in Russia, UBS Global Wealth Management’s chief investment office has issued a report predicting the team most likely to take the trophy home.
Well, it’s definitely good news for coach Joachim Low. Econometric tools and 10,000 simulations indicated that no country had higher odds of winning than Germany, which led the table with a likelihood of 24%.
It had a 36.7% likelihood of ending as runner-up and 51.3% probability of being a semi-finalist.
If the Swiss wealth manager’s model turns out to be accurate, this will be Germany’s fifth win since the World Cup began in 1930, bringing it on par with Brazil’s five wins to-date.
The model also showed that Brazil and Spain had good odds of winning, with chances of 19.8% and 16.1% respectively.
The results for all-time favourites England and France were surprising, with the model indicating only an 8.5% and 7.3% probability of their respective wins.
Belgium and Argentina were close behind the top five, with UBS analysts arguing that Argentina’s fate strongly depends on the form of its star players.
Meanwhile, host country Russia was all the way down at the 12th place, with a 1.6% chance of winning. The likelihood of an Asian team winning was close to nil.
UBS’ model failed in 2014, when it had predicted a win for Brazil. Instead, the host suffered from a humiliating 7-1 semi-final defeat against Germany.
|Winner||Runner-Up||Semi-Finalist||Quarter- Finalist||Winner Group Stage||Second Group Stage|
Commenting on the results, Mark Hafaele, CIO of UBS GWM said: ‘No matter whether they are analysing global markets or soccer tournaments, people tend to be biased towards local favourites.
‘The same quantitative discipline that the chief investment office applies to investments has proven useful in successfully looking beyond a home bias in portfolios and sports events.’
The report came complete with UBS’ views on investing in Russia, where it advises a neutral allocation to equities and the ruble, given heightened uncertainty regarding sanctions.
‘We don’t expect the funds spent on hosting the World Cup to directly boost growth in the medium- to longer-term,’ the team noted.
UBS, however, sees selective opportunities in Russian credit amid improving fundamentals in the past few quarters as well as cheap prices. It turned overweight on Russia in its emerging market credit strategy in April.