The State Street Investor Confidence Index (ICI) decreased to 79.7 in December 2019, down 1.7 points from November’s revised reading of 81.0.
The Global Investor Confidence Index decreased to 79.7, down 1.7 points from November’s revised reading of 81.0. The decrease in sentiment was driven by a 24.5 point drop in the European ICI to 109.4. Meanwhile, the North American ICI and the Asian ICI increased to 71.6 and 89.9, respectively.
The Investor Confidence Index 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.
“Investor sentiment in North America continues to lag behind its European and Asian counterparts. While still below the neutral level of 100, optimism around a workable China trade deal appears to have lifted the appetite of Asian investors,” says Rajeev Bhargava, head of Investor Behaviour Research for State Street Associates. “Interestingly however, the bounce in risk sentiment did not transmit into Europe, where investor confidence fell sharply this month, possibly from a combination of weaker economic data and continued uncertainty of a hard Brexit on the region.”
The index is released globally at 10am Eastern time in Boston on the last week of each month.