More contrarian sentiment readings:
Boston, August 25, 2009 – State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), today released the results of the State Street Investor Confidence Index® for August 2009.
Global Investor Confidence rose by 3.5 points to 122.9 from July’s level of 119.4. Looking across the regions, the confidence of North American institutional investors declined slightly by 2.2 points from 120.6 to 118.4, a decline echoed among Asian investors, whose confidence fell 2.3 points from 94.1 to 91.8. By contrast, European institutional investors displayed increased risk appetite, and their confidence benchmark rose 4.3 points to 109.2 from 104.9 last month.
Developed through State Street Global Markets’ research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Director Paul O’Connell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors. The index is based on financial theory that assigns precise meaning to changes in investor risk appetite, or the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.
“This month’s increase represents the eighth consecutive improvement in Global Investor Confidence, and places the risk appetite of institutional investors firmly in the range that is associated with accumulation of risk exposures,” commented Froot. “At the same time, the rate of increase in the Index has moderated relative to some months ago, suggesting that institutions are being somewhat selective in their allocations.”
“This month we note some increased regional variation across the Indices,” added O’Connell. “While European institutional investors continued to ‘catch up’ with their North American counterparts, in terms of reallocating out of cash, North American and Asian institutions displayed some ambivalence about further reallocations, given trends over the last six months. Keeping in mind that a level of 100 denotes ‘neutral’ for the Index – the level at which investors are neither reducing nor increasing their allocations to risky assets – we can see European confidence remains somewhat below that of North American institutions, and that caution prevails in Asia.”
Source: State Street