Global investor confidence was mixed last month as American investors felt less appetite for risk than their European and Asian counterparts, according to State Street.
According to a statement by State Street Global Exchange (SSGX), the global investor confidence index (ICI) jumped up by just 1 point to 101.8 since June’s revised reading of 100.8.
The modest increase was due to a decline in the North American ICI which fell to 103.4 from 104.2, while the European and Asia indices rose slightly by 0.7 points and 0.5 points to 91.5 and 103.3 respectively.
State Street Global Investor Confidence Index on July 31, 2018
Source: State Street
According to State Street ICI co-developer Kenneth Froot, investors around the world were still feeling cautious following recent market volatility.
“It is possible that the prospects of escalating trade protectionism, political uncertainty, and lagging earnings growth continue to depress institutional investor sentiment.
“The regional breakdown shows that North American and Asian investors have tamed their risk appetite from an overly optimistic level, with ICI readings just a few points above the neutral mark.
“At the same time, European investor sentiment remains anchored in risk-off territory,” he said.
State Street Associates managing director and head of investor behaviour research Rajeev Bhargava echoed Mr Froot’s sentiments.
“It appears that geopolitical uncertainty continues to be a major risk factor on the minds of investors.
“Despite the recent rebound in equity markets, we haven’t seen significant traction in risk appetite globally over the past couple of months,” Mr Bhargava said.
The ICI measures investor confidence or risk appetite by analysing institutional investors’ buying and selling patterns: the higher percentage allocation to equities, the greater the risk appetite.
A reading of 100 is neutral, meaning investors are neither increasing nor decreasing their allocations.
As the US election cycle draws to its close, investors must avoid getting distracted by the bluster around the result. ...