Investor Confidence Rises Strongly In July

Investor confidence rose at the highest rate in more than 18 months according to State Street’s Investor Confidence Index, and for the first time since September 2022 investors in all three regions had a positive outlook.

The Global Investor Confidence Index (ICI) increased to 107.7, up 11.4 points from July’s revised reading of 96.3. The increase in confidence was supported across all regions but was led by a 12.9 point rise in North American ICI to 103.8. Elsewhere, European ICI rose 4.3 points to 103.7 and Asian ICI rose 4.8 points to 102.2.

The 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; 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.

“Investor confidence saw its biggest jump in 18 months, with the Global ICI now solidly in risk seeking territory, as risk appetite improved in every region this month,” says Marvin Loh, senior global macro strategist at State Street Global Markets. “The improvement was led by North America, which recorded its strongest reading in a year on the heels of falling recessionary concerns.

“A pair of better-than-expected CPI prints have also supported the view that a soft landing was possible,” he continues. “While the monthly gain was not as strong in Europe, this regional ICI bounced back above 100, as overall disinflation started to accelerate, with a tenuous economic backdrop holding back further gains. Asia ICI showed a similar investor dynamic, improving back towards moderate risk appetite, although China’s economic challenges impacted further gains.”