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European Investor Confidence Continues To Fall In June
Robbie Lawther
28 June 2018
As political tensions across Europe continue to rise, the European investor sentiment plummeted 10.8 points to 90.8 in the month of June, according to . This fall carries on from the gloomy investor confidence drop in May. The period has coincided with prolonged uncertainty about the shape of the UK's Brexit deal and worries about rising protectionism between the US and European Union. A rise in market volatility, created to some extent by worries about issues such as protectionism, has prompted some of the the world's largest wealth management houses to recommended asset allocation shifts, as shown recently here. At the start of May, Geneva-headquartered Pictet, for example, announced in early May that it was moving equity allocation to a neutral stance, having been overweight of the market. Separately, a number of investment houses talked about the virtues of gold as a portfolio insurance asset – often a classic sign of nervousness. Another recent concern has been historically high valuations for equities in countries in the US, prompting concerns that markets are due for a correction.
State Street released the results of its Investor Confidence Index (ICI) for June, and it reported a sharp drop in investor confidence in the European ICI. This comes as Brexit is still an unknown entity, Germany is suffering from a fragile coalition and Italy is preparing for its populist government.
Elsewhere, there was a fall in the Asian ICI to 102.6, with a drop of 0.8 points since May. The only reported rise from the three regions analysed was the North American ICI, which rose by 0.8 points to 105.7
Overall, the Global Investor Confidence Index decreased to 101.7, down by 2.1 points from May’s reading of 103.8.
“In June, global institutional investors slightly decreased their risk appetite,” said Kenneth Froot, creator of the State Street ICI. “Escalating trade tensions across the globe, increasing protectionism, and diverging monetary policy between the major central banks have coincided with more cautious investor positioning.”