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iPredict accurately forecasts Hobbit outcome

Thursday, 28 October 2010, 12:24 pm
Press Release: iPredict

IPREDICT LTD

MEDIA RELEASE

FOR IMMEDIATE RELEASE

www.ipredict.co.nz

iPredict accurately forecasts Hobbit outcome

Wellington, New Zealand, 28 Oct 2010 ---

New Zealand's prediction market, iPredict Ltd, has maintained its 90% record of accurately forecasting political and economic events, following last night's announcement by Prime Minister John Key that "The Hobbit" movies would be filmed in New Zealand with additional government support.

The Chief Executive of iPredict, Matt Burgess, said that while Mr Key had been saying all week that the odds of "The Hobbit" staying in New Zealand were "at best 50/50", the market had priced the likelihood differently.

"Our analysis shows that since the stock on the likelihood of 'The Hobbit' leaving New Zealand was launched last Friday, a total of 17,674 contracts were traded at an average price of 30c - suggesting that, on average, the market believed, through the week, that the chance of the films leaving New Zealand was only 30%," he said.

"Similarly, a total of 7,979 contracts were traded in the stock on the likelihood of increased government support for the movies, at an average price of 76c - suggesting a 76% chance of extra support.

"That both stocks accurately predicted actual events, before negotiations were even complete, gives us continued confidence in the forecasting power of iPredict."

Mr Burgess said there were a large number of hypotheses about why the market believed the movies were safe, ranging from suggestions on union-aligned blogs that "The Hobbit" issue was contrived for political reasons through to market confidence in Mr Key's ability to achieve a deal with Warner Brothers given his background in international business. It was not iPredict's role to speculate on the true price drivers but simply to provide data to economic forecasters and the community on the likelihood of future events, Mr Burgess said.

Mr Burgess also noted that iPredict had indicated a 99% likelihood that the Reserve Bank of New Zealand would leave the Official Cash Rate (OCR) unchanged at today's OCR announcement, and that the market had priced this likelihood at an average of 95% since the contract's launch on 15 September. The bank has announced this morning there will be no change to the OCR.

iPredict is owned by Viclink, the commercial arm of Victoria University of Wellington, and operates with authorisation from the Securities Commission. Details on the company and the stock can be found at www.ipredict.co.nz

ENDS


 
 
 
 
 
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