August sees global investor confidence decline

State Street’s August Investor Confidence Index (ICI) has fallen 7.4 points from July, with declining confidence from North American and Asia investors seeing the index land at 94.3 for the month.

The North American ICI decreased from 103.1 to 92.5, while the Asian ICI fell 0.9 points to 102.6. The European ICI rallied, rising 8.1 points from July to 99.5.

“After a few months of caution and measured risk appetite, global institutional investors have started to display risk-averse behaviour as they navigate through elevated trade uncertainty and geopolitical turmoil,” State Street Associates’ Kenneth Froot, who helped develop the index, said.

“This sentiment was also seen across global equity markets as defensive sectors outperformed. The decline in confidence was particularly apparent for North American investors, with the North American ICI recording its lowest reading of the year.”

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Commenting on the change to the European ICI, State Street Associates’ head of investor behaviour research, Rajeev Bhargava, said that investor confidence in the region had exhibited a lot of volatility this year.

He pointed to Donald Trump’s trade policies and renewed worries over Italy’s debt burden as possible causes of investor uncertainty.

The ICI measured investor confidence or risk appetite quantitively by analysing the buying and selling patterns of institutional investors, with a reading of 100 being neutral as the level at which investors were neither increasing not decreasing their long-term allocations to risky assets.