The month of June saw investors’ risk appetites around the world drop even further, continuing the negative trend that began in May, according to State Street Global Exchange (SSGX).
A statement by SSGX said that the State Street Investor Confidence Index (ICI) fell to 101.7 from May’s revised reading of 103.8 points, a drop of 2.1 points.
The fall comes after a 11.8 point drop in May following a steady four-month climb over the first half of 2018, as reported by InvestorDaily.
The drop in June was attributed to a 10.8 point drop to 90.8 in the European ICI, as well as a 0.8 fall in the Asian ICI to 102.6.
However, the North American ICI increased slightly to 105.7 points, a rise of 0.8 points.
Source: State Street
State Street ICI co-developer Kenneth Froot said global institutional investors demonstrated a “slightly decreased…risk appetite” in June.
“Escalating trade tensions across the globe, increasing protectionism, and diverging monetary policy between the major central banks have coincided with more cautious investor positioning,” he added.
State Street Global Markets head of macro strategy for the Europe, Middle East and Africa region Timothy Graf said European political turmoil had taken a toll on investor sentiment.
“Faced with a confident, populist government in Italy and the possibility of a more fragile coalition in Germany, European investors retreated from risk once again in June and dragged the broader, global aggregate down to its lowest levels this year,” Mr Graf said.
The ICI measures investors’ risk appetite by analysing the buying and selling patterns of institutional investors, with a higher reading denoting higher risk appetite and, a ‘neutral’ reading of 100 signifying investors were neither increasing nor decreasing allocations to assets.