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Investor confidence drops in September
Global institutional investor confidence decreased four points during September from 92.0 to 88.0, according to the latest State Street Investor Confidence Index, which quantifies investor confidence based on their allocation to equities.
The results were driven by a dramatic drop in North America, where confidence plunged 7.3 points to 87.9, while confidence also eased slightly in Europe from 98.4 to 97.2.
The reverse was seen in Asia, where investor confidence increased 4.4 points to 107.9.
The results were somewhat surprising given the rally in risky assets since the previous release, according to index co-developer Ken Froot from Harvard University.
“One underlying driver here is the persistent softness observed in the US economy over the summer, which contrasts with the resilience of markets elsewhere, such as Australia, Canada, New Zealand and Sweden,” he said.
Paul O’Connell from State Street Associates, who also co-developed the index, said that institutional portfolio flows underlying the numbers revealed a rotation out of ‘core’ markets such as the US and Europe (ex-UK) and into ‘peripheral’ or emerging markets.
“Thus this month’s numbers reflect a re-evaluation of relative country prospects by investors, rather than a wholesale reduction in risk appetite,” O’Connell said.
AUTHOR
Mike Taylor
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