The Winter Olympics are upon us, and as the world gathers to watch the athletes compete in Milan Cortina, Italy, we turn our attention to a fascinating pattern uncovered by UBS. Historically, the host country’s equity market has exhibited a noticeable pattern around the Games. Equity performance tends to be weak one month prior to and after the Games, but there is typically a boost during the event itself.

According to UBS’s chart of the day, the host country’s equity index has posted gains 82% of the time with a median return of 1.7% during the Olympic period. This pattern is almost identical to that seen during the Summer Olympics, indicating that the boost in equity performance around the Winter Games may be a recurring phenomenon.

So, what could be driving this pattern? One possible explanation is that investors become more optimistic about the host country’s economy and markets during the Games, as they are exposed to positive media coverage and athletic achievements. This increased optimism can translate into higher stock prices, leading to a boost in the equity market.

It’s worth noting that this pattern is not limited to Italy alone. UBS found that this phenomenon has been observed in other host countries as well, including South Korea and Canada. However, Italy has been the most consistent performer, with gains 82% of the time during the Winter Games.

The implications of this pattern are significant for investors and market watchers. For those who are bullish on the Italian economy, the Winter Olympics could present a buying opportunity. Conversely, those who are bearish may want to consider hedging their bets or taking profits before the Games begin.