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From the synchronised drumming to the synchronised swimming, China’s Olympics have left the world agape. Human rights issues have not overshadowed the Beijing games; even the skies have been (mostly) blue. But beyond the PR value, will the $40bn lavished on venues and infrastructure pay dividends?

Beyond the capital, probably not. Foreign corporate investors hardly needed to be convinced of the size of the Chinese opportunity. Short-term, the economic impact may be slightly negative. Polluting factories have been shut down in Beijing and five surrounding provinces accounting for a quarter of GDP, curtailing activities such as steel, cement and chemicals. Restrictions run from late July to late September, when the Paralympics close. This slowdown and likely bounce-back will blur the picture for investors trying to discern the real underlying patterns in an economy that was already cooling as rising energy and raw material costs crimped manufacturing margins.

But China should avoid the boom and bust often associated with hosting the Olympics. Goldman Sachs found that the hosts of five of the last 10 summer games (excluding Moscow 1980 from the cohort) suffered Olympics-centred boom-bust cycles. Among them were Japan’s and Korea’s similar coming-out parties in 1964 and 1988. But countries most prone to busts were those where the Olympic investment, and host city, were far bigger relative to GDP than was the case for the Beijing games.

Separately, HSBC found that in the past 25 years, all but one host saw its market rise at least 25 per cent – generally outperforming world markets – in the 52 weeks after the games began. The exception, Sydney 2000, saw its market move sideways, sharply outperforming global declines. If the rule holds for a Chinese market, now down 59 per cent from its October peak, investors will cheer long after the Bird’s Nest falls silent.

Lex is the FT’s agenda-setting column, giving an authoritative view on corporate and financial matters. It is also one of the few parts of FT.com available only to Premium subscribers. This article is provided for free as an example. A Premium subscription gives you unlimited access to all FT content, including all Lex articles and the FT mobile Newsreader.

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