Investor Confidence Dips in June

After a brief respite in May, the State Street Investor Confidence Index (ICI) was lower again in June, falling 2.6 points to 94.6 from May’s revised 97.2 – a 100 reading is neutral.

All regions saw a decline in June, but the drop was most notable in European ICI, which fell 10.6 points to 57.6. Meanwhile, North American ICI was down 2.5 points to 97.1, and Asian ICI was down 4.8 points to 88.8.

The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners. 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.

“Investor appetite reversed in June with the Global ICI falling close to 3 points as regional concerns over economic growth continue to mount,” says Rajeev Bhargava, head of investor behaviour research at State Street Associates. “While the latest round of rate hikes by central banks to stem inflation has driven market volatility higher of late, the impact on US investor confidence has been noticeably more muted when compared to other regions, with both Europe and Asia witnessing a more pronounced decline in sentiment.

“Rising recession risks driven by a tricky combination of elevated levels of inflation, slowing business activity and an increasingly hawkish central bank is likely to blame in pushing confidence within Europe lower for the fourth straight month,” he adds.