SINGAPORE (May 30): Investor confidence increased in May, according to State Street Global Exchange’s State Street Investor Confidence Index (ICI).
The ICI increased by 6.6 points to 79.5, compared to 72.9 in April.
The index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. It assigns as precise meaning to changes in investor appetite risk.
Confidence among North American and European investors improved, with the North American ICI rising from 71.3 to 76.7, and the European ICI rising from 86.6 to 92.5.
However, the Asian ICI dropped by 4.2 points to 88.4.
Marvin Loh, senior global macro strategist of State Street Global Markets, says, “Investors that embraced ‘sell in May and go away’ rested easier this month, as risk assets are experiencing their weakest performance of the year. Driven by trade and growth concerns, global equities are set to close broadly in the red for the first time this year. Yields have all but collapsed, with developed market sovereign interest rates falling to their lowest levels in years.”
Investors have shown overall hesitancy all year, reflecting many concerns that have emerged in May, such as trade war and Brexit related uncertainty that have been dominating headlines of late.
Kenneth Froot, one of the developers of the ICI from State Street Associates says, “Institutional investors have been wary, and with potential supply-chain disruptions and concerns about rising protectionism it is understandable that sentiment remains anchored in the risk-averse territory.”
“However, while the low level of the index points to risk-off behavior over the last few months, the solid uptick this month indicates some investors may be moving back in to buy the dip,” Froot adds.
