Surveys

Global Investor Confidence Falls In March 2014; US Remains Resilient - State Street

Stephen Little Reporter 28 March 2014

Global Investor Confidence Falls In March 2014; US Remains Resilient - State Street

Global investor confidence fell from February's reading of 122.7 to 120.2 this month, largely driven by a decrease in risk appetite among European investors, according to State Street Global Markets.

Global investor confidence fell from February's reading of 122.7 to 120.2 this month, largely driven by a decrease in risk appetite among European investors, according to State Street Global Markets.

The firm's monthly Investor Confidence Index showed that confidence among European institutional investors decreased, with the European ICI falling 1.5 points to 108.6, down from February’s revised level of 110.1. Risk sentiment remained resilient in North America, while confidence among Asian investors increased, with the Asian ICI rising 7.4 points to 114.3 from the February reading of 106.9.

The index has been developed by Harvard University Professor Kenneth Froot and Paul O’Connell of State Street Associates. It measures investor confidence or risk appetite quantitatively by analyzing the buying and selling patterns of institutional investors. The greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to riskier assets.

“Geopolitical risk in the Ukraine, Turkey and other emerging markets has yet to have a significant negative impact on institutional investor behavior. Institutions have largely maintained their allocations to equities on a global basis. With no major negative news appearing on the economic front, sentiment remained unaffected during the period,” said Froot.

Jessica Donohue, senior managing director and head of research and advisory services at State Street Global Exchange, said that policy and credit fears in China had failed to dampen sentiment amongst Asian institutional investors.

“Our data suggests that institutions continue to add risk in the region in the face of mounting policy pressures. The People’s Bank of China’s recent move to double the Yuan trading band to allow for greater currency fluctuation, however, reflects policymakers’ commitment to financial liberalization reform,” said Donohue.

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