Final ICI Shows Mixed Confidence Amongst Global Investors
Posted by Colin Lambert. Last updated: September 27, 2023
The final publication of the State Street Investor Confidence Index (ICI), which is being retired on October 25, indicates optimism in North America and Asia, but a gloomier outlook for Europe.
The Global Investor Confidence Index increased to 108.7, up 0.9 points from August’s revised reading of 107.8. The increase was driven by an 11 point jump in Asian ICI to 112.6, and, to a lesser extent, a 0.8 point rise in North American ICI to 104.7. European ICI, meanwhile, declined 6.2 points to 97.5.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets 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.
“Investor confidence was stable in September, with the Global ICI posting a marginal gain on the heels of strong signals that the end of the global central bank tightening cycle was nearing a close,” observes Marvin Loh, senior global macro strategist at State Street Global Markets. “There were, nonetheless, mixed regional signals as economic divergence influenced overall investor appetite.
“North American investors remained risk seeking as the Fed signalled that a soft landing remains its base case as it projected just one more rate hike this year. In contrast deteriorating economic conditions in Europe prompted a pullback in our Europe ICI back below 100 to its lowest reading of the year. Conversely, additional stimulus efforts from China seem to have brightened the regional readings as the Asia ICI jumped 11 points to its highest reading in almost in almost 3 years.”
The reports that are replacing the ICI – the Institutional Investors Holdings indicator and Risk Appetite Indicator – are yet to be published for September.