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State Street’s Investor Confidence Index for February 2010 showed that institutions remain bullish on equities though just marginally.  The index fell to 103.9 from last months reading of 104.6.  Confidence climbed in North America and Europe, but declined slightly in Asia where tightening fears and an overheating Chinese economy have investors concerned.  Ken Froot, co-found of the index, elaborated on the most recent reading:

“Institutional investors continued to balance a number of competing factors against one another in making their risk allocations this month. Developments in Europe occupied much of their attention, as concerns around the long-term solvency of peripheral economies continued to grow. Although the most recent increase in the discount rate by the US Federal Reserve took place after the data for this month’s ICI was collected, institutional investors appear to have anticipated the change, and what it implies for relative investment prospects across the Atlantic.”

Paul O’Connell added his thoughts on the developments in Greece and Asia:

“In the early part of the month, investor sentiment appeared to overreact somewhat to developments in Greece.  However, by month’s end, institutional investors were approaching the European solvency issues in a more nuanced way. This, coupled with relatively good numbers on the US macroeconomic and earnings front, led North American investors to increase their allocations to risky assets overall. While Asian confidence fell back slightly, it remains close to the level it attained in September 2008, and as such does not represent an unduly pessimistic outlook.”

Source: State Street