State Street Global Markets’ Global Investor Confidence Index has fallen to 73.0 in April, down 0.7 points from March’s revised reading of 73.7.
The Asian ICI plummeted to 18.3 points, falling to 80.0 from 98.3. Meanwhile, North American ICI inched upward by 1.2 points to 68.0 and the European ICI rose from 95.5 to 102.8.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners. 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.
“Investor confidence dipped slightly in April, largely driven by weaker sentiment for Asia,” comments Rajeev Bhargava, head of Investor Behaviour Research, State Street Associates.
“Despite an end of the lockdown in China, the Asia ICI fell to its lowest level since 2005, possibly a reflection of weaker economic data regionally and renewed concerns over the regions ability to sustainably exit lockdown as cases resurface in previously locked-down countries. In contrast, however, US and Europe showed stability in investor appetite this month with Europe actually seeing a material rise in investor confidence. The unprecedented amount of stimulus central banks have injected into markets as well as signs of a slowing in new Covid cases locally seem to have had a stabilising effect on risk behaviour.”
