Global institutional investor confidence rebounded in March after dropping sharply this year from its December peak, despite a plunge in Europe.
The State Street Global Markets Investor Confidence Index, which quantifies investor confidence based on allocations to equities, noted an increase of 6.5 from February’s revised reading of 91.8 to reach 98.3.
The index had fallen from a high of 104.2 in December, which was the highest level since March 2010.
The March increase was largely due to a sharp rise in North America, where confidence rose 10.5 points to 103. Confidence was also up 8.7 points in Asia to 100.2 but declined sharply in Europe, down 15 points to 64.3.
“After the declines in February, March saw something of a rebound in confidence and institutional investors were comfortable adding to equity holdings after the pull back in prices that took place between 3 March and 16 March,” said index co-developer Ken Froot of Harvard University.
European investors were more cautious due to ongoing uncertainty around the size and form of the ‘Pact for Euro’ aimed at address the sovereign debt crisis, he said. Electoral uncertainty in Germany may also have been holding investors back, he added.
Fellow co-developer Paul O’Connell of State Street Associates said that institutional flows into emerging markets rose slightly in March but flows into developed markets were lackluster.
“Asia remained a destination of choice, despite the supply-chain uncertainty stemming from the tragic earthquake in Japan,” O’Connell said.
