November has seen the largest rise in investor confidence since June, according to State Street Global Markets, with the leap led by a changing US outlook and optimism around a COVID vaccine.
State Street’s Global Investor Confidence Index increased by 10.6 points from October to 90.7, mostly driven by a 10.6 point jump in the North American sentiment index to 87.4.
The Asian index also rose to 95.1 from its prior 91.8, while Europe fell for the second month in a row, down 1.8 points to 92.
The index is measured by analysing the buying and selling patterns of institutional investors, interpreting a greater allocation to equities as a higher risk appetite or confidence.
A reading of 100 is neutral, it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.
Marvin Loh, senior macro strategist at State Street Global Markets commented the November sentiment level was the second-highest in 2020.
“The gains were led primarily by an improving outlook in North America, which recorded its highest readings of the year on the back of the conclusion of the US election process and positive news regarding a COVID-19 vaccine,” Mr Loh said.
“Equity valuations reached new highs, with the Dow Jones poised to record its strongest monthly return of the year as value outperformed growth. In contrast, risk appetite fell to its lowest levels of the year in Europe, as surging virus cases resulted in another round of lockdowns and restrictions.
“Ongoing Brexit negotiations and an EU budget impasse further sapped investor confidence, although most European bourses are set to report double-digit gains for the month.”
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].