It just might.

We’ve analyzed the first month of data and have some exciting insights that might validate our assumptions. Chinese retail investor sentiment could very well be driving some stock prices significantly.

Introduction to Sino Intelligence

Sino Intelligence is a service that monitors Chinese retail investors' social media discussions and tells you what stocks are most talked about.

As the Chinese stock market is dominated by retail investors (>85% according to Reuters), we believe that social media discussions can play a significant role in driving single-stock volatility

How's it going?

The service is in development and we have started testing in April 2016. For our early adopters, we are currently sending out a daily email with the top 5 talked about stocks each day.

We’ve kept it under wraps and have only made our presence known through select digital channels over the last week.

We are very excited to share some insights, which could show that Chinese investor sentiment on social media can indeed drive stocks.

The results

We analyzed the top 5 stocks that were identified each day by Sino Intelligence in April, and looked at the correlation with the underlying stock movements during and after they were picked up by us:

Likely and Possible correlation are cases where we have seen a stock moving significantly either within a few days after being mentioned in our top 5 list, or on the same day.

Inconclusive correlation includes cases where we couldn’t clearly see a link between a stock being mentioned and a spike in its price. There could be a number of valid reasons for this, such as:

We could be seeing social media reacting after significant news comes out and after a stock has already moved, rather than before It could be because people are talking about an event which wouldn’t impact its stock price People could be talking about an event further away (such as a future launch of a product)





Case Studies

We look closer at two examples of “Likely” correlation below. In both of these cases, we did not see any announcements prior to the stock movement that could be directly attributed to the movement, so it appears that there was an increase in social media discussion around the stock before the market reacted.

Sino Intelligence picked up 300059.SZ a few times over the course of a week with the price remaining stable. Soon after, the stock began to sell off and was eventually suspended, citing that it had received permission from the regulator to raise new private capital.

Here we have 600696.SS, a stock that was in our list just before it went up significantly, and was eventually suspended, citing that it was planning for an upcoming material disclosure.

To be clear we do not have enough data to be in a position to tout any predictive capability and we do not make any buy or sell recommendations - we're merely saying that we have identified that there appears to be a correlation between a stock showing up on our top 5 list, and its volatility.

Conclusions

We're very excited to see that there appears to be a correlation between Chinese retail investors social media discussions and market movements. We'll continue to cover more discussion channels and work hard to improve our analytics and reports.

We hope you'll subscribe to Sino Intelligence and try it out.

We are currently offering it free to early adopters, so sign up today at Sino Intelligence

*We do not have positions and are not trading the stocks that are mentioned in this post or our newsletters