Investor confidence sees sixth consecutive rise in 14 years

The State Street Global Investor Confidence Index (ICI) has risen for the sixth consecutive month.

The global reading increased by 6.1 points to 95.8 from May’s revised reading of 89.7.

This was led by a 4.9 point rise in the North American ICI thanks to a resolution of the US debt ceiling debate and a 5 point rise in the European ICI. However, the Asian ICI fell by 4.3 points to 96.7 as China encountered its reopening post the COVID-19 lockdown.

Marvin Loh, senior global market strategist at State Street Global Markets, said: “Investor confidence was once again stronger in June, with the Global ICI improving for the sixth consecutive month, a streak that has only been replicated once (in 2009) in the 25 years since the creation of the index.”

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He noted that despite the rally, the ICI remains a neutral reading of 100 that signals a continued defensiveness.

“While confidence has rallied smartly since the start of the year, it remains below neutral, signaling a continued defensiveness towards overall risk allocations,” Loh said.

“The North America ICI reading continued to improve as the resolution of the debt ceiling debate removed a significant market risk from the radar. The Europe ICI was also stronger on the month, returning to risk seeking territory as it records the highest reading among the regions we track. Finally, Asia investor confidence deteriorated back below neutral as China continues to experience a bumpy post COVID-19 recovery.”

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.