Confidence muted as investors stay defensive

The State Street Global Investor Confidence Index (ICI) has seen a muted rise in June with a rise of 0.8 points, compared to 6.1 points in the previous month. 

The global index rose by 0.8 points to 96.2 in June led by a small uptick of 1.3 points in the North American index and by 0.7 points in the Asian ICI that had fallen in the previous month.

The European ICI, which had risen by 5 points in the previous month, instead fell in June with a drop of 5.4 points which reversed May’s gains. State Street said the drop in Europe was the result of deteriorating macro-economic data.

This month marked seven months of consecutive growth seen by the index.

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Marvin Loh, senior global macro strategist at State Street Global Markets, said: “Investor confidence continued to recover towards neutral, as the Global ICI improved to its highest level since last fall. However, overall investor tone remained defensive, with all our global and regional indicators registering a sub-100 reading.

“North America saw the greatest improvement with respect to investor sentiment, rising to its highest level in nine months as recessionary risk faded while inflation surprised to the downside. In contrast, the Europe ICI fell back below 100, with deteriorating data spreading across the region’s largest economies.
 
“Finally, the Asia ICI was largely unchanged as weak Chinese data prompted the government to engage in more aggressive stimulus efforts.”

The Investor Confidence Index was developed at State Street Associates, State Street Global Markets research and advisory services business. 

It measures 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.