State Street has reported a rise in investor confidence globally in the past month as investors increase their appetite for risk.
The firm’s Global Investor Confidence Index (ICI) rose by 8.4 points in October to 114.4, the highest reading for the index since April 2018, after recording a 4.0-point drop in September due to the resurgence of COVID cases.
North America is leading the charge in confidence according to State Street with an 8.0-point rise for the region’s ICI to 144.0.
Confidence in the Asia-Pacific region lifted to its highest level since January after moving up 5.5 points to 103.1, while Europe crept by 1.2 points higher to 96.8.
“The uptick in risk appetite was evident broadly across three regions, with the US witnessing the largest rise, potentially motivated by declining COVID infection rates locally,” said Rajeev Bhargava, head of investor behaviour research at State Street Associates.
“However, even with the improving virus situation and the gains witnessed recently in investor confidence, concerns over spillover effects from a China slowdown on other economies is an important risk we will continue to monitor as it could have negative impact on investor confidence in the upcoming months.”
State Street differentiated the ICI as being based on the actual trades of institutional investors rather than being opinion-based. The index measures change with the risk appetite of investors, with a reading of 100 being neutral.
More than half of investment managers recently surveyed by Citi said they were adopting defensive positions in response to the fragile macro environment.
On their credit portfolios, 56 per cent of the investors suggested they would shorten duration and stay defensive, 25 per cent said they will extend duration and 18 per cent remained bearish with a preference for building up cash buffers.
