A SURVEY of professional investors in Australia has found that they are almost twice as likely as retail investors to say that social media has influenced their investment decisions, but there is still widespread skepticism of social media’s value.
Fully 20% of institutional investors and sell-side analysts surveyed by the Australasian Investor Relations Association (AIRA) and communications firm Financial & Corporate Relations (FCR) said that information accessed through social media channels had influenced their investment decisions.
An earlier AIRA survey of retail investors in Australia and New Zealand, 63% of whom were over age 62, found that just 11% said social media had such an impact, while only 7% said they watch social media for investing purposes.
Skepticism of social media’s value to the investment process remains widespread among Australian investment professionals. While 26% said they do use social media, 74% do not. Half of all respondents (50%) said they don’t use information obtained via social media because it is not trustworthy.
Meanwhile, 89% of professionals expect no change in social media’s influence on their investment decisions in the next 12 months.
AIRA CEO: “Consider introducing a company-driven social media presence as a trusted source”
“Information about a listed entity generated by third parties may be seen as untrustworthy,” said AIRA CEO Ian Matheson. “AIRA encourages stock exchange listed companies to monitor what is being said about them online and also to consider introducing a company-driven social media presence as a trusted source of company information,” he added.
Added FCR Managing Director Anthony Tregoning: “The joint survey results indicate that use of social media for investment information is in its infancy in Australia. Australian companies are not yet using social media widely for investor relations purposes, but as more of them begin to disseminate information through social media we expect to see greater investor attention directed to these channels.”
According to the survey, 15% of respondents said they can access information through social media channels that they can’t get elsewhere. The most popular social media sources are Hot Copper, an Australian stock chat forum, which was used by 17% of respondents. Seeking Alpha (10%), LinkedIn (10%) and YouTube (10%) were other top social media sources. Less than 10% of respondents said they had used Wikinvest, Motley Fool, Facebook or Twitter for investment purposes.
Meanwhile, the survey found that the top sources of information for professionals are one-to-one and group briefings, IR websites, the Australian Securities Exchange’s website, Australian market data provider IRESS, analyst research, company emails and business media.
Among print and online business media, the Australian Financial Review was most popular (96%), followed by Yahoo Finance (55%), and Bloomberg (53%).