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State Street Global Markets today released the results of the State Street Investor Confidence Index® (ICI) for October 2020.
The Global Investor Confidence Index decreased to 80.1, down 3.8 points from September’s revised reading of 83.9. The drop in Investor Confidence was primarily driven by a 17.4 drop in European ICI to 92.8. The North American ICI fell a more modest 2.0 points to 76.8. Meanwhile Asian ICI increased to 91.7 from 84.5.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“Aggregate risk appetite slipped in October, and the decline in sentiment was seemingly driven by US and European investors, as a second wave COVID infections rose sharply and simultaneously across regions, again elevating concerns about growth,” said Rajeev Bhargava, head of Investor Behaviour Research, State Street Associates. “Interestingly, Asia witnessed a bounce in investor appetite, possibly reflecting the regions current ability to contain the virus locally. However, combined with the uncertainly over the upcoming US election, the long-term trend for global investor sentiment remains unclear. It will be important to see if risk appetite steadies regionally on the outcome of the election or whether the rise in COVID infections we are seeing remains a driving force that will continue to impact investors over the next several weeks.”
The index is released globally at 10 a.m. Eastern time in Boston on the last Wednesday of each month. More information on the State Street Investor Confidence Index is available at http://www.statestreet.com/ideas/investor-confidence-index.html.
