The global investor confidence dropped 4.5 points in August thanks to investors based in Europe, according to State Street Global Exchange.
State Street Investor Confidence Index (ICI) found the European ICI fell 6.8 points and was the largest contributor to the global ICI drop to 108.7.
Despite uncertainty in the Chinese market, the Asia ICI rose by 3.5 points, while the North American ICI fell 0.8 points.
State Street’s senior managing director and head of global macro strategy, Michael Metcalfe, said “the cut off to calculate this month’s investor confidence index reading was August 19th, so we have only captured some reaction to China’s decision to change its FX [foreign exchange] regime.”
“The fall in this month’s index that we can see so far was driven by investors based in Europe, where confidence has fallen below the key 100 threshold for the first time since August 2013.”
Commenting on the results, the ICI’s co-developer Kenneth Froot said the cautious tone in August was on the back of the devaluation of the renminbi and the continued turmoil in commodities.
“How this effects the Fed is yet to be seen; certainly the deteriorating overhang of global growth and the pull back in emerging markets makes a decision to raise rates increasingly precarious,” he said.
A reading of 100 is neutral where investors are neither increasing nor decreasing their long-term allocations to risky assets.
