Contrasting with a number of surveys, the index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.
Investors around the world increased risk appetite in August, recovering from July when worries about the Delta variant of COVID knocked sentiment, according to a measure of actual buying and selling behaviour from State Street.
The Global Investor Confidence Index rose to 110.1, an increase of 8.9 points from July’s revised reading of 101.2, according to State Street. The US organisation has a monthly State Street Investor Confidence Index®.
Confidence rose across all regions, led by European ICI, which rose 11.6 points to 104.8, and Asian ICI, which rose 11.2 points 98.4. The North American ICI also increased, albeit by a more modest 5.1 points to 110.7, State Street said yesterday.
The index was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. 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.
“In spite of ongoing concerns related to the delta variant and vaccine numbers, investor confidence remained remarkably resilient in August and [the] Global ICI recorded its highest reading in more than three years,” Rajeev Bhargava, head of Investor Behavior Research, State Street Associates, said.
“The resurgence in risk appetite has been uniform across all regions globally, with North America up 5 points and Europe and Asia both gaining double digits relative to July’s readings. While the positive sentiment is certainly encouraging, it will be important to see if investors can maintain this level of enthusiasm for risk assets in the coming months should Covid infection rates continue to trend higher and the Fed messages a more hawkish stance.”