State Street’s Global Investor Confidence Index (ICI) rose to 122.8 in August, up 7.2 points from July’s revised reading of 115.6.
The improvement in sentiment was driven by an increase in the Asian ICI from 92.1 to 101.7 and a six point increase in the European ICI to 127.7.
North American Sentiment fell one point to 110.3.
The Investor Confidence Index was developed by State Street Associates, State Street Global Exchange’s research and advisory services business, and Harvard University professor Kenneth Froot. 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.
“Despite a bout of risk aversion driven by geopolitical tensions in the early days of August, global institutional investor confidence remains resilient,” says Jessica Donohue, senior managing director and head of research and advisory services, State Street Global Exchange. “With benign developed market inflation, institutions may be positioning for continued accommodative policy from central banks.”
“The impending targeted longer-term financing operations (TLTROs), a lack of inflationary pressures across the Eurozone, and the potential for more unconventional easing from the European Central Bank (ECB) may have provided tailwinds to European sentiment,” says Paul O’Connell, State Street Associates. “Moreover, resilient Chinese growth has reduced fears of a hard landing and helped boost Asian sentiment. With Chinese inflation running at low levels, the People’s Bank of China may also have further room to stimulate the economy.”
