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Global investor confidence dips to lowest levels yet
Institutional investor confidence has dropped to its lowest levels globally since State Street began its Investor Confidence Index (ICI).
A 10.3-point drop in the European ICI in October caused the global index to drop from 87.3 to 80.6 for October.
Conversely, it was a four-point uptick in European investors' risk appetite in September which provided the only silver lining after four consecutive months of declining global confidence.
Risk appetite decreased around the globe, with the Asian ICI falling 2.9 points to 84.5, its lowest levels since the ICI's inception. The North American ICI dropped 2.7 points from 81.7 to 79.
The global ICI is 1.5 points lower than its previous low point in October 2008, according to State Street.
In September, State Street said North American's flailing confidence had been puzzling and counter-intuitive to the news coming from policymakers on both sides of the Atlantic.
"Institutional investors continue to display a pronounced, almost secular desire to reallocate away from equities and towards fixed income and cash securities, and this desire has accelerated through the recent market correction," said Harvard University professor Kenneth Froot, who was integral in the development of the ICI.
State Street Associates' Paul O'Connell said that when global investor confidence took a dive in 2008, the regional pattern was different than it was now.
"North American institutional investor confidence was about 6 points lower, but Asian investor confidence was 10 points higher. This shift is reflective of the changed investment outlook, with improved US prospects offset by slowing growth in the Asian region. The net effect is that institutional investors have little appetite for risky assets," he said.
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