October has seen investor confidence continue its upward trend from September and is nearing a neutral level, according to the State Street Global Exchange Investor Confidence Index (ICI).
The ICI measures institutional investor trades to determine changes in risk appetite. A reading of 100 is 'neutral' and indicates that investors are neither increasing nor decreasing their long-term allocations to risky assets.
The Global ICI saw a 3.6 point increase on September’s revised reading, rising to 99.1 from the previous month’s 95.5, which State Street Global Markets head of global macro Michael Metcalfe said was a positive sign.
“Investor confidence has now risen for two consecutive months and has recovered its losses following the Brexit vote,” he said.
“Moreover, the fact that investor confidence has risen even though the probability of a Fed interest rate hike has also edged higher in the past two months is encouraging.”
The increase in global confidence was driven by the European ICI’s 3.7 point increase to 89.1, the North American ICI’s 3.1 point climb to 95.4, and the Asian ICI’s record 120.5 reading, up 2.2 points on September.
“Amidst mounting jitters about the upcoming US presidential election and concerns regarding market valuation levels, global investor confidence remains shy of the 100 level," said ICI developer Kenneth Froot.
"It is worthwhile to highlight that Asian investor confidence stands at record levels since inception, implying investors have become more selective in allocating risk."
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