Investor confidence has slipped for the second consecutive month and remains at depressed levels despite a slight uptick in March, according to State Street Corporation.
The index fell a further 0.7 points in May from 87.1 to 86.4, compounding a fall of 3.9 points in April. While the plummet in April occurred mainly via a lack of confidence among Asian investors, State Street said May produced a notable increase in confidence among Asian investors who made up 2.3 points.
"But given that that region is coming off a record low, it is not in itself a strong signal of optimism," said State Street director, Paul O'Connell.
O'Connell also said stresses from the euro-region continue to make investors cautious and increase the attractiveness of cash and fixed income over equity investments.
The global ICI fell slightly from 87.1 to 86.4, with European investors the most pessimistic – falling 2.2 points from 100.2 to 98.0 in May.
"To some extent, recent market movements have vindicated the pessimistic stance adopted by global institutional investors this year," Harvard University Professor and index co-developer, Kenneth Froot said.
He said all regions were below the neutral index for confidence.
"When we look at the pattern of recent investor equity flows – which favours the United States, Japan, Scandinavia and core Europe over peripheral Europe – it is clearly a defensive one with respect to further deterioration in euro-region prospects," he said.
