Abstract
Sport is an obsession amongst most New Zealanders and in particular rugby, which is the national game. The All Blacks are the national team and give many New Zealanders an immense sense of pride as they represent excellence for all New Zealand on the world stage. However, with this high regard comes the burden of having to win. Following losses, a nation of fans can be brought to despair as some of the following news titles subsequent to New Zealand's 1999 Rugby World Cup semi-final loss to France illustrate:
"NZ psyche suffers after bad economics and footy."
"New Zealand in deflated mood following rugby loss. "
This is further supported by the following quote from the editorial in The New Zealand Herald:
"Seldom has this country suffered a greater sporting disappointment than its loss in the Rugby World Cup semi-final last Sunday and the trauma that seems to have gripped the country for almost a week now... tells us something about ourselves. "
With the emotions the All Blacks can generate throughout New Zealand, this raises the question of whether or not these can affect an economic index such as the New Zealand stock market. Saunders (1993) found a systematic relationship between New York weather and major American stock indices and argued that this could be best explained by the mood differences we often experience on rainy days compared to sunny days.
Similarly, Kamstra et al (2000) found that the returns of stock prices for four countries on Mondays that follow daylight savings time changes were significantly lower than for other Mondays. The difference was said to be possibly caused by changes in people's sleep patterns leading to greater anxiety and the desire to shun risky assets. Hedley (1996) finds evidence of investor overreaction supposedly caused by the euphoria of New Zealands's KZ7 1986/87 America's Cup Challenge, adding support not only to the influence of non economic factors on returns, but to the extent a sports result can influence returns. This paper will address this issue of whether there is a systematic relationship between All Black test results and the performance of the New Zealand stock market caused by the mood differences All Black fans feel following All Black victories compared to All Black losses. The null hypothesis is that All Black results do not influence New Zealand share market returns.