Media coverage has serious impact on stock movements, according to a recent report by Mediastow Media Intelligence. The more favourable the media coverage of a company, the better will be the price of its stock, says Mohamed Elzubeir, CEO and Founder of the agency.
Quoting the finding of the report, Elzubeir said: "The influential role of media was never stronger in the UAE. Our studies show that mass media manipulates the value of stocks in the UAE. Stock markets are often driven by psychological factors and not by rationale behaviour, which opens the door wide for media control. The rise and fall of stock markets is somewhat linked to how favourable the UAE media is to a company."
The media role in stock fluctuation has been highlighted in a study conducted by Mediastow to analyse the media coverage of the UAE real estate sector, with a focus on Al Qudra Real Estate, Aldar, Emaar, Sorouh, Dubai Properties, Nakheel, Sama Dubai and Damac.
Voicing the flip side of the coin, a media representative from a leading English language newspaper supported the claim with further clarification: "Media doesn't create news but merely reports. There's no denying that stock movements will reflect upward trend when there's positive news and vice-versa, but the news coverage is basically about what's happening in the market and in the companies whose stocks are affected." The media personnel, who specialises in stock reporting, clarified: "It's the news and not the reporting that effect the share's performance. After all we only report what's happening in the market."
To collate a comprehensive report on the subject, Mediastow monitored 4,700 articles from 125 publications through Q42008 to evaluate stocks movements of Emaar, Aldar Properties and Sorouh and correlated with media coverage.
A comparison of the facets of coverage (share of voice, coverage size, impressions and ad values), penetrations, content analysis (messages, message types, PR influence and reputation drivers) were featured in the report. The report also contains an analysis of the realty sector to put the performance in perspective. An evaluation was then undertaken, based on the above mentioned variables, to assess how media coverage varied with time and how it stood in comparison with each other.
Elzubeir said: "Very interestingly Aldar and Sorouh jumped in Raves values in December 2008, while the remaining property developers remained steady. This can be attributed to the economic crisis that has affected Dubai's property development/investment sectors more than Abu Dhabi."
Abu Dhabi property developers' stocks did not fall as sharply as Emaar's, Dubai's largest property developer. While Aldar took the lead, followed by Emaar and Sorouh in terms of stock price at the beginning of October, it was Aldar in the lead, followed by Sorouh and finally Emaar by the beginning of January 2009.
Elzubeir said: "Based on the coverage of Emaar, Aldar Properties and Sorouh from the November 14 to 20, 2008, the fluctuation in their stocks, reflected in an upward movement for Aldar Properties and Sorouh from November 15 and the downward movement of Emaar's stocks can be correlated."
"Precisely," confirmed the media representative, and said the nature of media reports is about what the news is in the market, which means it's not exactly the media coverage as such but the nature of news that directly affects stock movements.