Gloomy Europeans Drag Down Global Investor Sentiment Barometer

Tom Burroughes

30 November 2017

Asian and North American investors became more cheerful about the outlook in November while their European counterparts took a gloomier view, with politics weighing on minds, as based on their actual buying and selling patterns, figures show.

The Global Investor Confidence Index, produced by State Street Global Exchange, part of US-headquartered , decreased to 97.1, down 1.0 point from October’s revised reading of 98.1.

The minor decline in global sentiment was driven largely by a 12.0 point drop in the European ICI to 81.0. By contrast, the North American ICI rose by 3.7 points to 102.6 and the Asian ICI increased by 1.0 point to 97.5, the figures show.

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

“While tax reform prospects likely helped boost investor confidence in the US, rising political uncertainty and worries over tighter monetary conditions likely drove down sentiment in Europe,” Rajeev Bhargava, managing director and head of Investor Behavior Research, State Street Associates, said.

“It will be interesting to follow the path of investor confidence in the wake of failed coalition talks in Germany,” he added.