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Investor confidence falls in February by 1.4 points to 105.2

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The State Street Investor Confidence Index (ICI) for February 2015 decreased to 105.2, down 1.4 points from January’s revised reading of 106.6. 

Confidence among European investors declined the most, with the European ICI falling 8.2 points to 105.9, down from January’s revised reading of 114.1, while in Asia the ICI fell by 5.3 points to 93.8. However, the North American ICI rose by 3.1 points to 104.3.

The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the 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. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

“Improved labor market conditions in the US may have boosted North America investor sentiment,” commented Froot. “However, given the lack of inflationary pressures in the US, markets may push out their expectation of the first interest rate hike to later than the previously anticipated June date, which could provide a lift to sentiment.”

““The confidence of European managers fell once again in February to its lowest level since last April,” says Michael Metcalfe, senior vice president and head of Global Macro Strategy, State Street Global Markets. “This suggests either that investors are not as complacent about events in Greece as some bond spreads suggest or that the promise of QE in Europe has proved more alluring than its reality. Neither interpretation is particularly good news.”

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