Australians and local media outlets woke on Thursday morning to find they could no longer view or share news on Facebook, as the social media giant retaliated to proposed legislation, which would force it to pay for media content.
Angel Zhong, a senior lecturer in finance in the School of Economics, Finance and Marketing at RMIT commented there could be “huge implications for the Australian stock market”.
According to the lecturer, January media statistics showed one in three Australian Facebook users turned to social media to gather news and information. Similar research in 2016 from media intelligence firm Meltwater found one-third of Australians regularly read news stories on social media websites first.
“A lot of retail investors are in the habit of using Facebook to view news. While they can still view news from other sources, it means it may take longer for retail investors to look for and read news,” Dr Zhong said.
“This may lead to a delayed reaction to share market news, which in turn is detrimental to stock market efficiency and liquidity. For example, you read business news on Facebook each day on the way to work, which informs your portfolio adjustment decision.
“However, with no news updates on Facebook, you no longer keep up to date with the latest developments in the market and economy, which means you may lose some opportunities to adjust your portfolio in time.”
The impact of news and media attention has also been found to have a more pronounced effect on small companies, with smaller investor bases – Dr Zhong commented such firms would benefit from wider news coverage and attention.
Further, she referred to concerns that Google may close some access to news, after signing deals with major media organisations such as Nine, Seven and News Corp.
“[Such an outcome] will further exacerbate the impact of limited and delayed access to news on share market efficiency,” Dr Zhong said.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
