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29/04/20

Real Time Market Confidence Index

Article published in Finnish Kauppalehti 20.04.2020

State-owned Nordic Morning Group has published a new tool, which forecasts both country and industry specific trends. The tool is called the Real Time Market Confidence Index. https://nordicmorninggroup.com/rtmci/

The current Covid-19 pandemic has raised an important question: when can business 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 Group´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 is the new normal?”

The first customer for the tool was a Swedish real-estate company, second in the market. Årneby says that their index showed that the real-estate 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 the competitive 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 continuously according to the latest data. 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 The situation moves so fast that when companies get their hands on the economic information, it’s already outdated,” Årneby says.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, Founder & CEO of My Telescope, the company responsible for creating the tool. Cooperation with Nordic Morning Group 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 forecast then, and the new index tool includes the changes the corona pandemic 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, whose services include software focusing on forecasting.

Graviz says that utilizing AI in analyzing big data has taken huge steps during the last couple of 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 its 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 its 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 if the situation suddenly changes and the pandemic 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 corona with 94-95% accuracy. The company has gathered data on the pandemic, 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 are waiting 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 Group’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.

Find the original article from Kauppalehti (in Finnish) HERE.

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