Investor Confidence Plummets in November
Posted by Colin Lambert. Last updated: December 1, 2022
State Street’s Global Investor Confidence Index (ICI) fell to 90.4, down 14.0 points from October’s revised reading of 104.4, with US concerns leading the way as the regional index fell to its lowest level since the start of the pandemic.
North American ICI dropped 15 points to 88.7, Asian ICI fell 14.2 points to 91.0, however European ICI bucked the trend, rising 5.4 points to 91.8.
The ICI 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. State Street says the index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“Investors risk appetite contracted by its largest margin of the year as the Global ICI fell 14.0 points to 90.4, indicating falling equity allocations and overall market confidence,” says Marvin Loh, senior macro strategist at State Street Global Markets. “Growing recessionary concerns in North America contributed to the overall decline, with this regional measurement falling 15 points to 88.7, its lowest reading since the start of the pandemic.
“Asia recorded a comparably sizable 14.2 point decline to 91.0, as China’s continued adherence to its strict zero-covid policy obfuscated an expected regional rebound,” he continues. “Readings from Europe remained below 100, although they did marginally improve with a mild start to winter easing some concerns over the continent’s energy crisis.”