The State Street Investor Confidence index  for July 2008 had some good news: Global Investor Confidence rose by 3.6 points to 82.6 from a revised June level of 79.0.

Asian investors were the key drivers of this, as their risk appetite increased by 8.5 points from 74.4 to 82.9. The confidence of North American institutional investors decreased by 6.9 points to 84.7 while European institutional investors’ confidence fell by negligible 0.9 points to 80.5.

Developed through State Street Associates by Harvard University professor Ken Froot and SSA director Paul O’Connell, the index measures investor confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors.

The index is based on financial theory that assigns precise meaning to changes in investor risk appetite, or the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.

Professor Froot said: “Globally, confidence improved somewhat, though this masks some regional variation. Despite the market turmoil of the recent weeks, particularly in the financial sector, institutional investors perceive some value at current price levels, and their willingness to take risk to capture that value continues to improve from its December lows.”