Mobius links low volatility to social media

TOKYO: Mark Mobius has a leftfield theory on why volatility in global stock markets is so low.

“Social media is having a huge impact,” said the executive chairman of Templeton Emerging Markets Group, here.

“It’s creating confusion with a lot of false news. You’re getting a situation where a lot of information is discounted immediately because people are afraid that maybe the information they’re getting is not true.”

The VIX Index, the so-called fear gauge for United States stocks, fell earlier this week to its lowest close since 1993, as record-low turbulence plays out in global markets.

Marine Le Pen’s defeat in French elections was the latest development imbuing calm among investors.

Along with sowing doubt about the veracity of news, social media was shortening people’s attention span, according to the 80year-old fund manager.

That was softening the impact of events like Tuesday’s firing of FBI director James Comey, he said.

Mobius said US President Donald Trump’s action amid the agency’s investigation of Russian interference in last year’s election would meet a similar fate: people will brush it off.

That was true in trading on Wednesday, with MSCI’s global shares index up 0.1 per cent as of 7.02pm in New York.

“There’s so much controversy on Trump in many directions that this is one more page in this whole history of changes,” he said.

“I think it’s in the background, because it doesn’t have any economic impact.” Bloomberg