Surveys

Investor Confidence Improves As European Risk Appetite Grows – State Street

Natasha Taghavi Reporter 29 May 2013

Investor Confidence Improves As European Risk Appetite Grows – State Street

The global investor confidence index rose this month, increasing by 1.8 points from April’s revised reading of 93.0 to stand at 94.8, according to data from State Street Global Markets, part of State Street Corporation.

The primary driver for the rise in the index this month was a shift in risk appetite among European institutions, with the European ICI rising 5.6 points to 93.3 from the revised April reading of 87.7, the firm said in a statement.

Meanwhile, confidence also increased slightly among Asian institutions with the Asian ICI index ticking up to 86.0 from April’s reading of 85.2. However, after April’s sizable increase, confidence among North American investors consolidated somewhat, and the North America ICI declined by 2.2 points to finish at 102.5 for the month.

“It remains the case that the European index is below the neutral level of 100, and it may take an improvement in European growth prospects to alter this. Looking at actual buying patterns, institutional investors continue to favor Europe ex-UK, emerging markets and Japan, with less enthusiasm for non-Japan Asia,” Harvard University professor Kenneth Froot, who developed the index in collaboration with State Street’s Paul O’Connell, said in a statement.

The State Street investor confidence index analyzes the 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 risk appetite or confidence. A reading of 100 means investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

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