Investor confidence sees ‘solid uptick’ in May

Investor confidence increased in May, according to State Street, particularly in North America and Europe although it remains in risk-averse territory.

The monthly State Street Global Investor Confidence Index, which measured investor confidence by analysing buying and selling patterns of institutional investors, increased from 72.9 in April to 79.5.

There was particularly strong growth in North America which rose from 71.3 to 76.7 and Europe which rose from 86.6 to 92.5. However, confidence was muted in Asia which fell by 4.2 points.

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A reading of 100 is neutral – the level at which investors are neither increasing or decreasing their long-term allocations to risky assets.

State Street said investors remained in risk-averse mode as they were concerned about global issues such as Brexit and trade wars between the US and China but that some may be moving back in to buy the dip.

“Trade war and Brexit-related uncertainty dominated this month’s headlines. Institutional investors have been wary, and with potential supply-chain disruptions and concerns about rising protectionism it is understandable that sentiment remains anchored in risk-averse territory,” said State Street Associates’ Kenneth Froot, one of the index developers.

“However, while the low level of the index points to risk-off behaviour over the last few months, the solid uptick this month indicates some investors may be moving back in to buy the dip.”

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