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Investor confidence resilient
28 August 2014
State Street’s Global Investor Confidence Index rises 7.2 points to 122.8 in August
Institutional investor sentiment remains resilient despite a
bout of risk aversion driven by geopolitical tensions in the
early days of August. The Global State Street Investor
Confidence Index (ICI) rose to 122.8 in August, up 7.2 points
from July's revised reading of 115.6.
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.
"With benign developed market inflation, institutions may be
positioning for continued accommodative policy from central
banks," said Jessica Donohue, senior managing director and head
of research and advisory services, State Street Global
Impending targeted longer-term financing operations, a lack of
inflationary pressures across the Eurozone, and the potential
for more easing from the European Central Bank may have
provided tailwinds to European sentiment added managing
director of State Street Associates Paul O'Connell.
"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," he said.
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 index differs from
survey-based measures in that it is based on the actual trades,
as opposed to opinions, of institutional investors.