Investor Confidence Index Fell In August

Nick Parmee 31 August 2011

Investor Confidence Index Fell In August

Investor confidence declined to a reading of 89.6 in August, down 12.9 points from July's revised figure of 102.5, according to the latest figures from State Street Global Markets, the investment research and trading arm of Boston-headquartered State Street Corporation.

The most significant decline was exhibited by North American investors, with confidence decreasing to 88.6, down 13.9 points from July's revised level of 102.5. Declines were more muted elsewhere, with the European index sliding 4.6 points to 90.5, down from July's revised reading of 95.1. Among Asian investors, confidence decreased 0.6 points from July's revised level of 95.8, to 95.2.

The index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. It 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 is neutral, being the level at which investors are neither increasing nor decreasing their allocations to risky assets.

This month's 12.9 point decline is not as severe as the 21.7 point decline registered among North American investors in October 2008 at the height of the financial crisis.

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