March saw investor confidence rise in Asia and Europe while North America saw a small decline owing to scepticism in the US stock rally, 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 increased 4.2 points throughout March, rising from 91.2 in February to 95.4.
This growth was led by a sizable 11.9 point increase in European confidence, up to 95 points, and a smaller increase in Asia, up to 109.6 points from the previous month’s 104.3.
North American confidence, however, reduced by 0.3 points, declining from 91.9 to 91.6 points for March.
“In the US, significant scepticism remains given the strong run in stocks year-to-date,” said ICI developer Kenneth Froot.
“Exiting historically low rates is a policy withdrawal investors have not experienced before; therefore it is natural that such an extreme policy is being questioned.”
State Street Associates managing director and head of behavior research Rajeev Bhargava said the reason Europe’s confidence level has “reversed course” on the previous month’s fall was in part the result of the recent elections in the Netherlands.
“Easing of political tensions in the region post the Dutch elections, as well as sustained economic momentum on the back of a series of positive economic surprises, seems to have contributed to the more constructive tone from investors,” he said.