Global institutional investor confidence increased fractionally in December after having spent two months at its lowest recorded level, according to the State Street Investor Confidence Index (ICI) for December.
The index, which measures the risk appetite of global institutional investors based on their buying and selling of equities had been steadily dipping throughout 2012 until it reached 80.5 in November, the lowest recorded figure since the index was developed in 1998.
This was on the back of a record low in North American confidence, with European confidence beginning to recover. However the ICI rose 0.4 points to 80.9 in December as North American confidence rebounded from 72.4 to 77.8, while confidence among Asian investors rose 3.8 points to 89.1.
However confidence in Europe declined in December, falling 4.8 points to 95.2.
"As has been true for some months now, global institutional investor confidence remains weak as institutions continue to shy away from equities," said index co-developer Professor Kenneth Froot of Harvard University.
"In the past year institutions have bought assets directly linked to a reduction in European tail risks, such as peripheral bonds and European banks. However, there is little evidence that institutions are interested in rebuilding core equity allocations in a broad brush manner to previous levels," Mr Froot said.
Overall the global ICI and all three regional measures finished the year well down, with the biggest yearly change seen among North American investors (down 12.1 in 2012), according to Paul O'Connell of State Street Associates.
"With global dividend yield around 2.8 per cent, and increasing talk of nominal [gross domestic product] targeting among policy makers, we will be keen to observe whether there is a turnaround in equity flows in the new year," Mr O'Connell said.
