Asset Management
Global Investor Confidence Dipped In June
The index from State Street actually tracks what investors do with their assets rather than just ask them about it.
A barometer of investors’ actual buying and selling behaviour
shows that they cut back on risk in June, and their confidence
took a knock from slightly increased prospects of US rate rises
and some concerns about the Delta variant of COVID-19.
The State Street Investor Confidence Index®, produced by State Street, for June
came in at 96.3, a drop of 2.1 points from May’s revised reading
of 98.4. Investor confidence declined across all regions, with
Asian ICI suffering the most, falling by 9.0 points to 91.7. The
North American ICI was down 3.4 points to 95.3, and the European
ICI slipped 2.0 points to 91.0.
“Risk appetite dipped slightly in June as was evident by our
Global ICI that ticked down a couple of points from its modified
May reading,” Rajeev Bhargava, head of Investor Behavior
Research, State Street Associates, said. “The move was partially
driven by weaker sentiment from US investors, likely in response
to heightened expectations of policy normalisation given the
Fed's update to their dot plot guidance this month.”
“In addition, increased tightening fears out of China combined
with greater uncertainly around the impact of the delta variant
may have steered confidence sharply lower amongst Asia investors,
with Asian ICI fully retracing its gains from the prior month,”
Bhargava said.
The index measures investor 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.