Surveys
Investment Sentiment Ticks Up In May
A measure that looks at the specific buying and selling activity of investors, rather than just their views as measured by pollsters, shows that Europeans became more optimistic in May, lifting a global barometer earlier.
European investors recovered some of their risk appetite in May
as COVID-19 cases eased, lifting the overall level of sentiment
in that month from where it stood in April, although in Asia and
North American the mood soured slightly.
The latest temperature check on the actual buying and selling
habits of investors came from State
Street Global Markets, issuing its State Street Investor
Confidence Index®. The Global Investor Confidence Index increased
to 73.3, up by 0.3 points from April’s revised reading of
73.0.
A slowdown in the number of virus-driven deaths, infections and
easing of European lockdown measures helped boost sentiment,
according to the authors of the report.
A recent perhaps incongruous feature of investment sentiment is
how markets have recovered significantly from their 2020 lows,
contrasting with sharp rises in unemployment and slumping
activity in a range of countries.
State Street's index measures investor confidence quantitatively
by analysing the actual buying and selling patterns of
institutional investors. The index assigns a precise meaning to
changes in investor risk appetite: the greater the percentage
allocation to equities, the higher the risk appetite or
confidence. A reading of 100 is neutral.
“The shifting focus from country lockdowns to restarting economic
activity allowed the Investor Confidence Index to remain mostly
unchanged in May,” Marvin Loh, senior macro strategist, State
Street Global Markets, said. “The slowing of COVID-19 cases in
Europe and the phased restart of its most impacted economies
lifted sentiment by 6 points, recovering most of the losses from
the prior few months.
Expectations of additional fiscal and/or monetary stimulus from
Europe also contributed to the improving tone.”
“However, the North America ICI was minimally impacted, as the
progression of the virus is still on a path towards peaking,
while concerns remain over reinfections as all US states have at
least begun to partially reopen,” Loh said.
