Portugal: Influence of Economic Journalism on Investments on the Stock Market

Jorge Marinho

Ph.D. in Communication Sciences, BA in International Journalism, Professor at the University of Porto (Portugal) Journalism and Communication Sciences Department, research supervisor.

e-mail: marinho.mediaanalysis@gmail.com

Abstract 

In this article, there are various analyses regarding the influence of Portuguese economic journalism on investments on the stock market. In this regard, we also address issues pertaining to the quality of economic journalism and the pressures of economic groups on journalists. The problem of journalist manipulation on the part of their sources is another matter being focused on in this article.

Keywords: economic journalism; stock market; media; the Portuguese press.

Introduction

This article amounts to a selection of various parts of some research works conducted as part of the curricular unit of Psychosociology of Communication in the Communication Sciences Program at the University of Porto / Portugal (academic year 2013-2014). Mainly exclusive interviews were selected for this article. Under my supervision, the aforementioned research was performed by several groups of students, in keeping with the following subject: Influence of Economic Journalism on Investments on the Stock Market.

In this article, with the presence of various experts, we basically examine the context of the press in Portugal with economics as its main topic, particularly the “Jornal de Negócios” newspaper.

Economic journalism and investments on the stock market

As part of the Portuguese media, Rui Neves, editor of “Jornal de Negócios” / Porto office / Portugal, is one of the professionals included in this academic research. In an exclusive interview, Neves defines the target readers of “Jornal de Negócios” as follows: ““We’re talking about entrepreneurs, managers (a lot of human resources staff, from the Government, top-level executives, academics, namely in the fields of economics, management and even research).”” (Neves 2014 in Meireles et alii 2014). This professional clarifies that, ““Likewise, economics newspapers are often mistaken, in terms of target readership, for rich people. It has nothing to do with that, as there are many wealthy people who don’t even read newspapers. It has to do with people who are interested in this field.”” (Neves 2014 in Meireles et alii 2014).

From a quantitative standpoint, “”In times of economic crisis, we notice that the tendency of newspapers is for sales to drop quite a bit. Why? Because people have less money and one of the supposedly non-essential expenses that are cut, for example, is in newspapers, and we notice that quite a bit.”” (Neves 2014 in Meireles et alii 2014). However, Neves adds, ““Interestingly, when there is economic crisis, newspapers specializing in economics, especially dailies, see an increase in sales. Why? People crave information, since there are many changes, with people living anxiously, and they need to somehow satisfy their hunger for information on what is happening (which has a lot to do with economics).”” (Neves 2014 in Meireles et alii 2014). This journalist also examines another type of media, while keeping the economic crisis in the background: ““Despite dealing with an empirical analysis here, we notice that, even in most headlines in generalist newspapers, a person sees that it’s almost solely economics. Even in the first few pages, it’s almost solely about economics.”” (Neves 2014 in Meireles et alii 2014).

As for economic journalism’s power to influence investments, Rui Neves believes that “”The stock market and its investors live off of information, as news coming from the media have a major impact.”” (Neves 2014 in Meireles et alii 2014). As a journalist, Neves elaborates on this thinking: “”We make so-called contents on certain listed companies; when they are positive, their result is generally positive (it doesn’t always work that way; sometimes there is negative news on a given company and, on that day, the company even improved, which is why it is said that the markets are a bit irrational).”” (Neves 2014 in Meireles et alii 2014).

Another “Jornal de Negócios” journalist, Ana Torres Pereira, in an exclusive interview, also refers to the influence of economic journalism on the stock market: “”We are in a global world, and it is normal that news might somehow influence every market player.”” (Pereira 2014 in Cunha et alii 2014, p. 21).

In another exclusive interview, Filipe Costa, Professor of the Curricular Unit of Markets and Financial Investments at the University of Porto Faculty of Economics / Portugal, regarding the stock market, makes the following statements: ““I think that the economic press has, has always had, and will always have reasonable influence on investments. I say this because it channels the information to the small investor, who would otherwise have difficulty accessing it.”” (Costa 2014 in Cunha et alii 2014, p. 18). The above-mentioned academic thinks that ““The more difficult it is to obtain quality information on financial assets, the greater the press’ influence on investment, as the investor will seek to set anchors on which to base his investment, and the information that is easily accessible through a newspaper works to perfection for such a purpose.”” (Costa 2014 in Cunha et alii 2014, p. 16). Filipe Costa completes his reasoning: ““By this, I don’t mean that the influence is positive or negative, but, rather, that such influence exists mostly in the sense that the newspaper is often a substitute for gathering and analyzing information firsthand.”” (Costa 2014 in Cunha et alii 2014, p. 16).

In yet another exclusive interview, Camilo Lourenço, a journalist often present in various Portuguese media, including “Jornal de Negócios,” considers that, ““When markets start becoming more mature and people are more sophisticated in their decisions, the quality of information is very important. And if we want to understand the impact of that information on the stock market, this is the decisive element (…).”” (Lourenço 2014 in Pires de Lima et alii 2014, p. 4). For the aforementioned professional, ““The specialization of journalists, when we read a piece of information, contributes toward giving us the idea or the sensation that what is there is properly looked into and is more reliable than if there were no journalists regularly devoted to that.”” (Lourenço 2014 in Pires de Lima et alii 2014, p. 4).

As for the media’s current clout on investor decisions on the stock market, Camilo Lourenço points out opinion articles: ““I believe we are witnessing the professionalization of opinion (…) This means that people these days are concerned about opinion in a way they didn’t use to. (…) Because opinion is no longer, ‘I feel that,’ ‘I think that;’ it’s, ‘based on these data, I perform my analysis’” (Lourenço 2014 in Pires de Lima et alii 2014, pp. 6-7).

Rui Neves also considers that certain opinion columns run by journalists specializing in economic journalism hold considerable sway over investor decisions (Neves 2014 in Meireles et alii 2014). In this regard, “”There are some well-known international columnists writing for major international newspapers, the so-called oracles, whose analyses are observed by many investors. In Portugal, there are two or three who are followed and who have some impact, more in terms of macroeconomic analysis and not so much with regard to companies and stock market trends.”” (Neves 2014 in Meireles et alii 2014).

Regarding the quality of Portuguese economic journalism, Costa provides the following viewpoint: ““Actually, there are many good opinion articles, both in Portugal and abroad; however, as concerns news and the assessment of certain variables, the information is not always examined in the best way in those newspapers. The findings often are not in line with the facts, as there is the tendency to oversimplify, resulting in distorted information.”” (Costa 2014 in Cunha et alii 2014, p. 16). To this same end, in an exclusive interview, Nuno Casimiro, a stock market investor, also provides his insight: “”Economic journalism in Portugal is of poor quality. Journalists are trained in journalism, but financial issues sometimes require knowledge in and understanding of management. The fact that I was trained in management also raises my expectations.”” (Casimiro 2014 in Cunha et alii 2014, p. 20).

According to Lourenço, the credibility of both the journalist and the media is pivotal: “” (...) the relevant information for capital market purposes also greatly depends on the person providing such information. That is, the credibility of the journalist or of the analyst is critical for understanding the impact such information can have”” (Lourenço 2014 in Pires de Lima et alii 2014, p. 11).

"Jornal de Negócios", a Portuguese newspaper

Pressures on the media

Are there internal or external pressures on journalists toward the publishing of a given article? Rui Neves, editor of “Jornal de Negócios” / Porto office, gives us his reply: “”Of course there are, and any journalists who say otherwise must be living in a hole. Journalists have this stubborn knack of saying they aren’t subject to pressures, but this is a lie. Journalists in the field of economics are obviously the target of pressures.”” (Neves 2014 in Meireles et alii 2014). This professional gives us his take with regard to the matter in question:”” If we didn’t have pressures, then this would be a sign we wouldn’t be doing anything worthwhile, our news reporting would cause no impact whatsoever, nobody would care about what we said, if there were nobody who would rattle us about such news.”” (Neves 2014 in Meireles et alii 2014). However, Rui Neves considers that ““The main thing that matters is the way the journalist deals with such pressures, of which there are several types (…).””(Neves 2014 in Meireles et alii 2014). According to Neves, ““(…) there are conspicuous pressures (via threats). Then there are pressures which very subtly attempt to get the person to reconsider the matter.”” (Neves 2014 in Meireles et alii 2014).

With regard to journalists’ sources, Rui Neves does not disregard the following situation: “” (…) there is someone behind the scenes who has conveyed information whereby he doesn’t want a company’s good image to be made known and, in fact, then, such news appears in the newspaper. (It will be published as negative news, and the person who has conveyed such information will be pleased. This is not important to the journalist, but only whether or not the information is true).”” (Neves 2014 in Meireles et alii 2014). This expert explains, ““(…) there are people who have every interest in seeing a piece of negative news come out on a given company, just as there is a great deal of interest on the part of the company and of the so-called communication agencies and communication consultants, for positive news to be published.”” (Neves 2014 in Meireles et alii 2014). In view of this, as concerns professional procedures, “”The journalist’s main function involves cross-referencing information, to check whether or not such information is true. If true, it should be published.”” (Neves 2014 in Meireles et alii 2014). Rui Neves also adds that ““Then there is the pressure of losing a source by disclosing a news item; this is one of the worst kinds of pressure, when a journalist has a good source and loses it because, at some point in life, he has material that could jeopardize the said source, which then says, "if you publish this, I’ll never give you anything again”” (Neves 2014 in Meireles et alii 2014).

 As for the issue of companies’ influence on the media, Ana Torres Pereira, a journalist at “Jornal de Negócios,” gives us the following reply: ““We can’t say there is no pressure from economic groups; however, it’s up to management not to pass on any existing pressure to journalists. Thus, regarding “Jornal de Negócios,” we feel that our work is not affected by any kind of moves.”” (Pereira 2014 in Cunha et alii 2014, p. 21).

With regard to any attempts at interference in the media, on the part of companies listed on the Lisbon Stock Exchange, Lourenço makes reference to EDP, as an example: ““I believe that management at EDP is competent enough to realize that it can’t influence the management of a newspaper. They might not like something, they might use the phone to say, ‘I feel the news you’ve published isn’t right,’ or even, ‘I feel that this standpoint is not correct,’ but that is one thing – it’s a legitimate manifestation of viewpoints. It isn’t necessarily... Indeed, it isn’t at all about pressuring”” (Lourenço 2014 in Pires de Lima et alii 2014, p. 6).

Could it be that, somehow, the major media ownership groups influence their editorial line? Filipe Costa gives us his answer: ““Yes, this is undeniable. If we take a newspaper at random, and if it is possible not to disclose its name, we won’t need more than half an hour to figure out its political and economic tendencies. Determinations made by their ownership groups often influence the editorial line.”” (Costa 2014 in Cunha et alii 2014, p. 19). Costa points out that, ““With rare exceptions, impartiality is non-existent in today’s media. If it is possible to elect political parties, it is also possible to induce changes in the stock prices through the press.”” (Costa 2014 in Cunha et alii 2014, p. 19). From the standpoint of Casimiro, “”Completely speaking, neutrality is always difficult. Still, at times, the number of news items on certain companies even becomes excessive.”” (Casimiro 2014 in Cunha et alii 2014, p. 20).

Conclusion

By and large, throughout this article, and taking Portugal’s media landscape into account, the various experts interviewed agree that the economic press can influence investments on the stock market, chiefly on the part of small investors, as stated by Filipe Costa (2014 in Cunha et alii 2014, p. 18). To this end, we need to highlight the role of opinion articles.

The quoted experts also underline the following aspect: at times, economic powers and sources of information pressure journalists and attempt to manipulate them.

References

Monographs

Casimiro, Nuno (2014). «Entrevista Exclusiva». In A Influência do Jornalismo Económico nos Investimentos na Bolsa de Valores. Opa da Sonae sobre a PT. Análise do “Jornal Económico”, Ana Cunha, Carolina Rodrigues, Catarina Ferreira, Eduardo Braga, Gisela Moreira, Juliana Martins, Manuel Pérez, Pedro Gomes, Rita Gonçalves, Jorge Marinho (research supervisor). Porto: Curso de Ciências da Comunicação da Universidade do Porto.

Costa, Filipe (2014). «Entrevista Exclusiva». In A Influência do Jornalismo Económico nos Investimentos na Bolsa de Valores. Opa da Sonae sobre a PT. Análise do “Jornal Económico”, Ana Cunha, Carolina Rodrigues, Catarina Ferreira, Eduardo Braga, Gisela Moreira, Juliana Martins, Manuel Pérez, Pedro Gomes, Rita Gonçalves, Jorge Marinho (research supervisor). Porto: Curso de Ciências da Comunicação da Universidade do Porto.

Lourenço, Camilo (2014). «Entrevista Exclusiva». In A Influência do Jornalismo Económico no Investimento na Bolsa de Valores. Caso EDP-Iberdrola & Media, Ana Rita Pires de Lima, Catarina Tomé, Daniel Carvalho, João Fernandes, Luísa Santos, Nuno Teixeira, Ricardo Neves, Rúben Vieira, Jorge Marinho (research supervisor). Porto: Curso de Ciências da Comunicação da Universidade do Porto.

Pereira, Ana Torres (2014). «Entrevista Exclusiva». In A Influência do Jornalismo Económico nos Investimentos na Bolsa de Valores. Opa da Sonae sobre a PT. Análise do “Jornal Económico”, Ana Cunha, Carolina Rodrigues, Catarina Ferreira, Eduardo Braga, Gisela Moreira, Juliana Martins, Manuel Pérez, Pedro Gomes, Rita Gonçalves, Jorge Marinho (research supervisor). Porto: Curso de Ciências da Comunicação da Universidade do Porto.

Internet

Neves, Rui (2014). «Entrevista Exclusiva». In Influência do Jornalismo Económico na Bolsa de Valores.Visibilidade Mediática da Empresa Sonae, Ana Meireles, Ana Gomes, Ana Costa, Cloe Mattos, Francisco Moya Parens, Mafalda Leite, Maria João Monteiro, Natacha Oliveira, Jorge Marinho (research supervisor). Porto: Curso de Ciências da Comunicação da Universidade do Porto. Retrieved 4.6.2014 from http://issuu.com/natachaoliveira0/docs/o_impacto_do_jornalismo_econ__mico_

Photo by: Jorge Marinho

Published by Marinho Media Analysis / October 9, 2014

http://www.marinho-mediaanalysis.org/2014/10/portugal-influence-of-economic_9.html