Investors Shrug Off Market Mayhem: Confidence Rises

The latest State Street Investor Confidence Index (ICI) suggests that investors are shrugging off extended losses in equity markets and higher volatility generally, by rising 1.5 points to 108.8.

A reading of 100 is neutral, being 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.

The global increase was led by a 7.7 point jump in Asian ICI to 100.1. North American ICI rose as well, up 2.4 points to 109, however European ICI fell 5.5 points to 100.1.

“Despite heightened equity market volatility experienced globally, risk sentiment expressed by institutional investors remained steady in September as the Global ICI rose slightly to 108.8,” says Cayla Seder, macro strategist with State Street Global Markets’ multi-asset strategy team. “As anticipated, European investors were rattled by a continued energy crisis, diminishing growth prospects and hawkish global central banks; as a result the EMEA ICI tumbled 5.9 points.

“Going forward, it will be important to monitor whether the dip in European investor confidence persists given the market’s negative reaction to the UK’s recent fiscal plans,” she continues. “Overall, the increase in the September Global ICI can be largely attributed to Asia-Pacific investors as risk appetite grew in tandem with the reopening of borders and easing of restrictions in Macau and Chengdu China.”