The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

(An earlier version of this article was used on WealthBriefingAsia, sister news service to this one.)

A global measure of investors’ buying and selling behaviour showed that their confidence about the future improved in March compared with February, mainly led by Europe, although a fall in Asian sentiment detracted from the change overall.

The Global Investor Confidence Index, produced by State Street Global Markets, increased to 93.9, up by 2.0 points from February’s revised reading of 91.9. The increase in investor confidence was driven by the European ICI, which rose by 12.6 points to 90.7, and the North American ICI, which rose by 1.1 points to 94.4. Meanwhile, the Asian ICI dropped 4.9 points to 93.2.

“After seeing it fall sharply for two-months in a row, investors’ confidence, led by Europe, stabilised and rose modestly in March. While the overall level of the index suggests investors should remain watchful of risky assets, the modest improvement in confidence suggests they are learning to live with higher yields – for now at least,” Michael Metcalfe, head of Global Macro Strategy, State Street Global Markets, said. 

The index measures confidence or risk appetite 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 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 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.