Investor confidence up 4.5 points in January

Investor confidence has increased to 89.3 in January, up 4.5 points from December’s revised reading of 84.8, according to State Street Global Markets.

The positive results of the latest State Street Global Investor Confidence Index were led by a rebound in European investor confidence (IC), which bounced back a significant 18.2 points from December’s low to 85.3.

Asian IC rose slightly, up 1.7 points to 97.1, but was offset by a 1.4 point decline in North American IC to 93.6.

State Street Associates, head of investor behaviour research, Rajeev Bhargava, said: “Investors continued to shy away from risk assets in January as the global IC continued to hover close to its weakest reading in over a year.

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“Sentiment within the US remained subdued as an increasingly hawkish stance from the [Federal Reserve], rising COVID-19 infection rates locally due to the Omicron variant, and a disappointing start to earning season likely led to a continued reassessment of allocations away from higher beta assets.

“On a more positive tone, investor confidence across Europe recovered a bit as the regional IC rose 18 points from December’s reading.

“Absolute levels, however, still remain consistent with risk averse behaviour, so it will be important to see if momentum continues to build.”

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 measured investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

A reading of 100 would be neutral; it would be the level at which investors were neither increasing nor decreasing their long-term allocations to risky assets.