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Geo-Social Trends To Watch In Finance

If your dollars depend on instant information, you need your fingers on the global pulse.

By: Karl Swannie (@KarlSwannie) and David Morgan (@Where_IsDave)

Geo-Social Financial Trends to Watch

The best way to monitor and engage the pulse of financial trends is through crowd-sourced information. Billions of posts are made daily to social media that offer real-time data on world activities. Amazingly, this ocean of data is still drastically underused by most market analysts. Financial analysts need to be able to monitor millions of posts and be alerted of the most valuable data, all in real-time. Tools that can do this need to be a weapon in every financial analyst's arsenal.

Tim Steer, a Partner at Artemis LLP weighed in on the impact social media analysis can have on market analysis. “Take journalists, for example, and those in the research and development world, and they would say that Twitter is the most important source for breaking news. Curious, therefore, that social media sites are so important for these professions, but seemingly not for those engaged in research at the big investment banks and broking houses and indeed to those who have such a large say in what stocks go into our pension portfolios." (source)

This information is big data and is used by emergency responders, security and risk management professionals to help save lives. Financial professionals are now exploring the use of this same data, paired with powerful technology to access it for real-time and predictive analysis.

The best way to monitor and engage the global pulse is through crowd-sourced information. [Tweet This]

Major Market Events Caused by Social Media

The Frankfurt Stock Exchange sees millions of dollars changing hands every day, yet there are usually less than 50 people on the trading floor. The rest is traded automatically. Automatic trading can have major impacts on financial markets as seen in the Hash-Crash of 2010. For those who are unfamiliar, the Hash-Crash occurred when a member of the Syrian Electronic Army accessed The Associated Press’s Twitter account and tweeted something that temporarily knocked 145 points off the Dow and “briefly erased $200 billion of value from U.S. stock markets.” (source) This sharp decline in value is mostly attributed to automatic trading.

Geo-Social Financial Trends to Watch

Just as impactful are posts from major investors like we saw in Carl Icahn’s $12 billion Apple tweet. Within 60 seconds of the tweet being posted, the share price rose more than $3. At closing, $AAPL shares were trading at $489.57, a $13 spike in one day representing a $12 billion increase in Apple’s market cap (source). CEO’s of major companies can impact share prices in less than 140 characters as well. Just 93 characters earlier this year from Tesla’s ($TSLA) CEO Elon Musk inspired a $1 billion increase to his company’s market cap in under 24 hours (source).

The opinions or announcements of some prominent investors, CEOs and other influencers can have a profound effect on the market. Monitoring the social media accounts of these individuals and being alerted when they post new content could be the key to knowing valuable information first.

Within the field of social search, the financial sector has been gleaning intelligence from large signal surveillance to advise on:

    • Insurance
    • Investments
    • Local economic conditions
    • Political economic conditions
  • Global economic conditions

More and more, large financial firms are focusing on international feeds and large-scale incidents to gain valuable insights and identify opportunities.

The 2014-15 Venezuelan protests were a good example of this. During 2014-15 there was a series of protests (+2000) and political demonstrations in Venezuela as a result of inflation and shortages of goods.  This was interesting for economists watching a country that remains dependent on oil revenues, which account for roughly 96% of export earnings, about 40% of government revenues, and 11% of GDP (source).

Simultaneously, areas like the Ukraine were the topic of interest in the international press during their revolution. This was remarkable, as three-fourths of Ukraine’s oil and natural gas demand is met by imports (source).

The differential within these world events created unique economic conditions for the hard commodity of oil. The differential effect also influenced Futures contracts, which were set and secured by the asset.

The Important Takeaways

This is just one example. Whether it’s flooding in Thailand’s industrial areas affecting the production facilities of Japanese corporations, or earthquakes affecting shipping routes in the Indian Ocean, getting a sense of what is happening on the ground is crucial for making informed decisions.

Spatial analysis and social media provides analysts with up to the second information and insight for monitoring and assessing probabilities of risk, within the realization of opportunity. It assures professionals that uncertainty does not deflect the endeavor of corporate economic goals.

Tools like Echosec function as a social media search engine and are paramount to discovering financial trends among other industry trends, are becoming more prevalent within the financial space.

Being able to parse through millions of social media posts for the most valuable information gives analysts another edge over the rest of the market. The ability to track events on a global scale in real time, provides data and helps to set markets for minimized risk.

Risk mitigation through financial technological tools might come from areas like:

    • monitoring uncertain financial markets
    • threats from unsecured projects
    • accidents
    • natural causes and disasters
    • major events
  • attacks from competitors

Spatial, social and visualization technology is becoming a bigger part of the financial sector. As these tools become even more robust and intelligent than they currently are, they are having an increasingly important role in financial analysis and decision making. The first analysts to become experts at using this new crop of tools will undoubtedly have the upper hand at understanding the financial trends that impact the market.

Get a Consultation with Echosec to start analyzing financial trends by location.