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State Street Global Exchange® today released the results of the State Street Investor Confidence Index® (ICI) for November 2018.
The Global Investor Confidence Index decreased to 82.7, down 1.7 points from October’s revised reading of 84.4. Confidence among North American investors further weakened, with the North American ICI decreasing from 81.6 to 79.2. The European ICI had a small up-tick of 0.4 points to 91.9 while the Asia ICI increased by 2.6 points to 102.2.
The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. It measures investor confidence or risk appetite quantitatively by analyzing 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.
“This month, it appears there was a reset in investor sentiment, and with the exception of Asia investors, it has severely reduced optimism amid recent market turbulence. And as result, managers are now strongly adjusting their risky-asset positioning,” said Kenneth Froot.
“While the sentiment of global consumers and purchasing managers is rolling over gently to reflect the potential of economic headwinds, investor confidence has posted one of its quickest deteriorations in a decade. Dramatic drops in August and September were a prophetic warning of the market volatility that has dominated the fourth quarter, and investor confidence has fallen again in November,” commented Michael Metcalfe, senior managing director and head of Global Macro Strategy, State Street Global Markets.
“One surprising element of this month’s ICI, given the bearish narrative around the potential of a US and China trade war, was that sentiment of investors based in Asia actually improved over the month.”
About the State Street Investor Confidence Index®
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.
