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The joke tweet that cost investors $25 billion

Friday, July 05, 2013 . posted by Walter Adamson T he Reserve Bank of Australia announces changes to of f icial interest rates on the f irst Tuesday of each month, and then debrief s journalists and analysts the next day. On July 3 an analyst tweeted a comment f rom a business lunch where the Governor of RBA was explaining their decision. T his tweet sent the Australian currency and stock markets into f reef all, costing stock market investors alone $26 billion dollars and costing sellers of the Australian Dollar roughly $1 billion. T he tragedy or perhaps farce was that later the RBA clarif ied that the RBA Governor's comment was meant as a low-key "joke". T he sharemarket and the AUD recovered a day later in response to the RBA conf irming the comment was not meant to be taken seriously, but perhaps some investors lost both ways?

The joke t weet t hat cost invest ors billions

T he reaction on the currency market was instant, and reportedly f rom outside Australia. So who was listening? Let's examine SocGens Kit Juckes' twitter account f or clues.

Who was list ening t o Kit Juckes' Twit t er?

He has nearly 3000 f ollowers, and has the prof ile of a "broadcaster" rather than an "engager" because he f ollows less than 10% back in return. We can see that only 1.7% of his f ollowers are in Australia, with 28.9% in the US and 23.1% in the UK. T he latter two were obviously listening. Most of his f ollowers are male - 88% - perhaps the makeup of the f inancial trading community? And we can also see f rom the biographies of his Twitter f ollowers that they have strong interests in f inancial trading. See the most common descriptions that his f ollowers use are "trader" "markets" "f inancial" "views" and "economics". T hey are the kind of people who would obviously sit up and take notice of currency commentary. And in this case they did not just sit up, they acted ! If we check the authority of the f ollowers we f ind that the average Authority is only 3.3 / 10. Only 1% have an Authority of 9 or above. T hat's not a great result as it means that Kit Juckes f ollowers are more listeners than experts in their own right. See the gallery below for the chart of the followers' Authority.

Who are t he inf luent ial f ollowers and where

Although the average f ollower Authority is only 3.3 there are among the f ollowers some with high authority and very large numbers of f ollowers. T he @CMEGroup has 752,011 f ollowers, and @MarketWatch has nearly as many. T hat's 1.5m people that Kit Juckes can potentially reach if these two f ollowers re-tweet his original tweet. Both of these are accounts located in the US.

T hat's probably more than enough potential reach to set in train the trading activity we witnessed against the AUD. Foreign investors would want to exchange their currency f unds and stock investments bef ore the AUD f ell f urther. We can also deduce that these f ollowers know when to listen out f or Kit's "announcements".

They know when t o list en f or Kit 's t weet s

Although we commented that Kit's account had the prof ile of a "broadcaster" we can also take a deeper dive to discover when in f act people do interact and engage with his messages by commenting or retweeting. T his analysis shows that this engagement happens on Tuesdays and Wednesdays, not coincidentally the days on which the Reserve Bank of Australia respectively announces it's rate decisions and then explains them.

We can see the period on Tuesday mornings, and then Wednesday mornings and af ternoons is when people engage most with Kit's inf ormation and that gives us a clue that they are probably listening f or his commentary on the RBA rate decisions at those times. T his helps explain how the reaction to the $25b Tweet was so fast .

Summary of t he t weet which cost ASX invest ors $25b

T he analysis shows us that although Kit Juckes is not a f inancial tweep celebrity or superstar with hundreds of thousands of f ollowers that he was able to create a massive reaction because: 1. He has enough reach to touch a signif icant number of people; 2. He has some very Authoritative of f shore f ollowers with very large audiences (although they is less than 1% of his f ollowers);

3. T hose f ollowers know when engage with him, and they repeat his views on RBA decisions. We should also note that this near instantaneous - a whole new game which trading authorities around the globe are now having to come to grips with in terms of market disclosure. Are you reaching the right audience in social media? Call us to ensure that you are. *T he ASX market cap f ell 1.9% on a value of $1.4 trillion, and currency trading in the AUD totals about $300 billion each day, and we assume 50:50 buy sell, and the AUD f ell 0.65 cents or 0.709% f rom 0.916 post the tweet to 0.9095 immediately af ter the tweet which wiped that f rom $150 billion of sellers equity. T hanks to Sally M Rose f or the conversation which led to this analysis. Walter Adamson Join me on Google+ My Social Presence http://xeeme.com/walter Connect with me /adamson at Linkedin Follow Kinship Digital our Linkedin Company Page