State-owned Nordic Morning has published a new tool in collaboration with My Telescope, which forecasts both country and industry specific trends
The market sentiment shows that 2020 is a lost year.
The tool is called real-time market confidence index.
Corona epidemic has risen an important question: when business can get back to normal?
“Continuous waiting can do more harm to the economy than the virus. We hope that with the help of this tool, companies have the courage to make decisions and help the economy recover faster” Nordic Morning’s CEO Anne Årneby tells M&M.
“Every company has a plan for 2020, and as every CEO now knows, that plan does not work in this situation. What should we do to move forward? When will we reach the stage which we feel as the new normal?”
First customer for the tool was a Swedish real-estate company, second in the market. Årneby says that their index showed that real-estate market as an industry was not hit as bad as the rest of the economy. This encouraged the company to continue their work by adapting to the situation which led to an increasing market share and gave them a cutting edge compared to their biggest rival.
“The client is super happy” Årneby praises.
The groundbreaking factor in the index is its real-time information Årneby says. Based on machine learning, the software analyzes, and updates forecasts according to the latest data continuously. This gives companies more time and support to make strategic decisions faster.
“Still in January two weeks was a drop in the ocean, now it is the ocean. The situation moves so fast that when companies get their hands on the economic information, it’s already outdated” Årneby says.
R&D behind the software started in 2015, says Rodrigo Graviz, CEO and the second founder of the company behind building the tool. Cooperation with Nordic Morning started in August 2019. Årneby says that the development started by looking on how companies trust has evolved through time. The current situation could not be forecasted then. The new index tool includes the changes the corona-epidemic has brought.
“Most CEOs say that the only thing they know, is that they don’t” Graviz laughs. He has a background in the financial company Morningstar, which services include software focusing on forecasting.
Graviz says that utilizing AI in analyzing big data has taken huge steps during the last couple years, and now these tools can be used way more efficiently in forecasting. RTMCI’s data includes the traditional indicators such as GDP, unemployment data, purchasing power parity and investment development. Additional information is obtained from politics, consumer behavior and continuous opinion polls. In terms of the consumer trust, the company makes it own forecast in which it utilizes analysis on search engine behavior and mood development in both social and traditional media, meaning sentiment data. Machine learning and the algorithm of the software is supported by making retroactive analysis on it’s use, which makes it possible to specify the used data sources and their emphasis.
“In this kind of situation, the whole market and capitalist system is driven by people’s mood and behavior, one should not forget that” Graviz says.
But what is the situation suddenly changes and epidemic under control starts to evolve again, how fast one can recognize the development from the index?
“Two weeks beforehand” Graviz says into the web camera without blinking. He praises that the software has succeeded in forecasting the development of the corona with 94-95% accuracy. The company has gathered data on the epidemic, and it’s impacts to economy since January. Graviz sees this as a unique advantage.
Årneby and Graviz both state that the biggest challenge currently is, that many waits paralyzed for further government actions. For development of different industries, the right way to act however would be to move way sooner as passive attitude could lead to losing growth opportunities, when companies react to economic growth too late.
Graviz says that with the data different governments could find out the right industries to target financial support to create growth, and not use money in the wrong places.
Nordic Morning’s tool is however directed primarily to companies. The paid service has 120 different industries’ indexes available. For free, one can see Finland’s and Sweden’s general trust indexes and other countries such as UK will be added soon.