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Investor Confidence Index falls in October
30 October 2013
Institutions concerned by US long term fiscal policy uncertainty
The State Street Investor Confidence Index (ICI) for October 2013 highlights the different perceptions of fiscal stability held by investors on either side of the Atlantic, with growing confidence in Europe mirrored by increasing disquiet in the US.
The global index fell to 95.7 in September (down 5.6 points from September's revised reading of 101.3) on the back of sentiment in North America, which fell by 17.8 points, pushing the North American index well into pessimistic territory at 86.5.
By contrast, confidence improved substantially among European institutional investors, reflected in a 10.2 point increase in the European index to 111.9.
The Asian ICI saw only a modest change, rising 0.9 points to 96.2. 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 fact that the North American ICI posted a record fall in the same month that the European ICI posted its largest gain in almost three years tells you all you need to know about how policy perceptions are changing between the two areas,” said Michael Metcalfe, head of cross strategy research at State Street Global Markets.
“With European confidence at its highest level since July 2007, investors hope that the worst of the Eurozone crisis is past. The US crisis of confidence, in contrast, may just be the beginning, unless policy uncertainty is reduced.”