Investor confidence reaches three-year high

The global State Street Investor Confidence index (ICI) has increased by 8.4 points from September’s revised reading of 106.0 to 114.4, helped by a rise in investors’ confidence across North America, Asia and Europe.

The global reading was the highest level it had been in three years, State Street said.

The North American ICI grew eight points to 144 and was followed by a 5.5 point (to 103.1) and 1.2 point increase in Asian ICI and European ICI, respectively.

Rajeev Bhargava, head of investor behaviour research at State Street Associates, said the uptick in risk appetite was evident broadly across three regions, with the US witnessing the largest rise, potentially motivated by declining COVID infection rates locally.

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“However, even with the improving virus situation and the gains witnessed recently in investor confidence, concerns over spillover effects from a China slowdown on other economies is an important risk we will continue to monitor as it could have negative impact on investor confidence in the upcoming months,” he said.

The index assigned a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence, with a reading of 100 being neutral as the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.