Global investor confidence has hit its highest level in two years as investors pin their hopes on a vaccine roll-out and the end of political turmoil in the US, a new survey has found.
The State Street Global Investor Confidence Index (ICI), which is based on the trades of institutional investors around the world, recorded a reading of 104.1 for December 2020. The index ranks investors’ appetites to increase their allocations to risk assets, with 100 being a neutral reading.
The drive towards risk assets was led by Asian investors, with the Asia region index coming in at 112.6, 17 points up on the November 2020 score. US investors also increased their allocations, with the North American index coming in at 103.5.
Meanwhile, European investors were still pessimistic about the months ahead as new COVID outbreaks hit most economies, with the European investor index falling to 87.2, down four points on the previous month.
“As an overwhelming 2020 finally drew to a close, investors ended the year on more optimistic footing with the Global ICI recording its highest reading in over two years,” State Street Associates head of investor behaviour research Rajeev Bhargava said.
“The uptick in risk-seeking behaviour was largely driven by US and Asia investors as the release of COVID vaccines this month, prospects of a fresh stimulus package out of the US and post-election certainty were likely contributing to a more positive outlook on asset markets.”
However, Mr Bhargava added that it was possible confidence would recede again in the new year depending on the seriousness of new COVID outbreaks and the success of vaccine roll-outs.
Economists agree that the Reserve Bank is likely to remain in inflation fighting mode until December. ...