Surveys
Global Investor Confidence Rose In July, Asia Lags
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The State Street barometer of confidence is distinctive in that it looks at the actual transactions investors make.
An index showing the actual buying and selling habits of the
world’s investors showed that they grew more confident in July as
vaccination progress helped sentiment, although Asia lagged other
regions, according to figures from State Street.
State Street’s Global Investor Confidence Index increased to
100.6, a rise of 4.0 points from June’s revised reading of 96.6.
The increase in confidence was primarily driven by a 9.3 point
jump in the North America ICI to 105.1. The European ICI also
increased slightly, rising 1.8 points to 92.8. Meanwhile, the
Asian ICI continued its decline from June, falling 4.8 points to
87.0.
The index measures investor confidence or risk appetite
quantitatively by analysing what institutional investors do. 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.
“Risk appetite improved in July as the Global ICI ticked higher
on confidence of continued reopening tailwinds,” Marvin Loh,
senior macro strategist at State Street Global Markets, said. “US
investor sentiment reversed all of last month’s weakness with
longer-term inflation expectations stabilising despite
higher-than-expected current price readings. Interest rates also
fell by their widest margins in over a year, which kept financial
conditions supportive of risk assets,” he continued.
“In contrast, however, Asian investor confidence retreated to its
lowest levels in a year, likely due to the region’s vaccination
levels lagging much of the developed markets and growth concerns
starting to emerge in China. And, of course, we will need to keep
an eye out moving into the fall if Delta variant concerns
continue to grow,” Loh added.