SINGAPORE (June 27): The State Street Investor Confidence Index (ICI) has increased to 87.6, up 8.2 points from May’s revised reading of 79.4 – a reflection of how investors across all regions investors across all regions have an improved appetite for risk.
Developed by State Street Associates, State Street Global Exchange’s research and advisory services business, the ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. The greater the percentage allocation to equities, the higher risk appetite or confidence.
Rajeev Bhargava, managing director and head of investor behaviour research at the State Street Associates, says, “We continue to see improvement in institutional investors' risk sentiment this month. While lingering trade tensions have been weighing down investor confidence and imposing stress on the global economy for some time now, markets have experienced tailwinds as of late as central banks in developed countries have turned more dovish.”
Albeit still being below the 100-level benchmark which is the neutral level at which investors are neither increasing nor decreasing their long-term allocations to risky assets, the North American ICI rose from 76.5 to 82.1, while the Asian ICI increased from 88.8 to 96.1. The European ICI rose from 92.4 to 103.2.
Kenneth Froot, who co-developed the index with Paul O’Connell, says, “The regional breakdown reveals a return to positive sentiment by European real-money investors, perhaps on expectations that dovish ECB policies may help reflate the Eurozone economy. Moreover, the Asian ICI also improved, likely driven by the hope of a compromise in trade tensions between the US and China at this month’s G20 meetings in Osaka, Japan and positive spillovers from Beijing’s stimulus.”
