The results of the latest State Street Investor Confidence Index (ICI) have been published — gathered by measuring investor confidence or risk appetite quantitatively, analysing the actual buying and selling patterns of institutional investors.
State Street reported a 0.5-point increase in January 2023, from a revised figure of 76 points in December to 76.5 points.
Asian investors spurred the monthly improvement, with the Asian ICI up 5.7 points to 92.5 points, despite concerns over the latest outbreak in COVID-19 case numbers particularly in China.
The North American ICI also rose in January, up 0.7 points to 73.1.
Growth across Asia and North America was slightly offset by a 0.3-point decline in the European ICI to 102.2 points.
However, confidence among European investors remains strongest, lingering above the neutral reading of 100 points.
“The precipitous decline in risk appetite experienced over the past few months paused in January as the global ICI rose to 76.5, from December’s revised reading of 76,” Rajeev Bhargava, head of investor behaviour research, State Street Associates, observed.
“While Europe continued to hover above the 100 level, appetite of US investors remained markedly more subdued, likely driven by increasing fears of an impending recession locally.
“Interestingly, sentiment in Asia improved this month, a reflection of rising optimism within the region despite elevated concerns over the rapidly increasing rate of COVID infection.”
The results of the State Street ICI come amid mounting speculation of a slowdown in monetary policy tightening from the world’s central banks.
Key indicators suggest inflationary pressures have passed their peak, with markets bracing for a looming global recession.
Investor sentiment slumped in response to aggressive interest rate hikes in 2022, with fixed income and equities allocations taking a hit.
Global funds network Calastone recently released findings from its latest Fund Flow Index, revealing a combined 77 per cent year-on-year fall in net inflows reported by managed funds across Australia.
This was down from $35.7 billion in 2021 to $8.3 billion.
