The State Street Global Investor Confidence Index increased to 114.5 in April, up 3.0 points from March’s revised reading of 111.5.
Investors across all regions expressed an appetite for risk, with the North American ICI increasing from 109.1 to 112.3, the European ICI rising from 102.0 to 110.9, and the Asian ICI from 109.6 to 112.7.
The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. It 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 index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“The April numbers came together with a general sense of cohesion amongst institutional investors and their confidence in risky assets. It appears that growing risk appetite echoes the strong start to the Q1 earnings season, even amid the recent challenges of heightened volatility and trade war fears,” says Froot. “Despite the continued volatility in global equity markets it is interesting to see that institutional investor confidence continues to hold up across all regions,” says Lee Ferridge, senior managing director and head of Multi-Asset Strategy, Americas at State Street Global Markets. “Given disappointing data more recently, it is particularly notable that confidence in Europe rose strongly in April. Should volatility remain elevated, we will continue to look to our Investor Confidence Index for any signs that this faith in asset markets is starting to falter.”
