Surveys
Investors Walked Away From Risks In April
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Strong inflation, the increased likelihood of rate rises and geopolitical alarms encouraged investors in most regions to reduce risk, as shown by their buying/selling behaviour in April.
A State Street
barometer of the actual buying and selling habits of investors
around the world showed that they turned more cautious in April,
taking risk off the table as global growth expectations dropped
and as central banks
considered tightening monetary policy.
The Global Investor Confidence Index fell to 92.9, down 6.6
points from March’s revised reading of 99.5. The decrease was led
by an 8.0 point drop in the North American ICI to 95.2 as well as
a 6.7 drop in the European ICI to 76.2. Meanwhile, the Asian ICI
rose 2.4 points to 92.0, State Street said earlier this week.
“The increasingly hawkish stance from the Fed in the face of
surging inflation coupled with dampened global growth
expectations likely drove aggregate risk sentiment lower.
Interestingly, Asia was the only region that witnessed gains this
month. However, with Covid infection rates soaring in some
regional markets and the resultant lockdowns impacting economic
activity, it remains to be seen if this constructive path
persists,” Rajeev Bhargava, head of Investor Behavior Research,
State Street Associates,” said.
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.