Investor confidence rises despite uncertainties

Institutional investor confidence appears to be on the rise despite continuing political uncertainty in the US and the fall-out from Brexit in Europe, according to the latest State Street Investor Confidence Index (ICI).

The index increased to 99.1, up 3.6 points from September's revised reading of 95.5 with the improvement in sentiment driven by an increase in the European ICI from 85.4 to 89.1, along with the North American ICI rising from 92.3 to 95.4, and the Asian ICI rising from 118.3 to 120.5.

Commenting on the index, one of its founders, State Street Associates Ken Froot said that amidst mounting jitters about the upcoming US presidential election and concerns regarding market valuation levels, global investor confidence remained shy of the 100 level which is regarded as neutral.

"It is worthwhile to highlight that Asian investor confidence stands at record levels since inception implying investors have become more selective in allocating risk," he said.

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State Street Global Markets head of global macro strategy, Michael Metcalfe said investor confidence had now risen for two consecutive months and had recovered its losses following the Brexit vote.

"The fact that investor confidence has risen even though the probability of a Fed interest rate hike has also edged higher in the past two months is encouraging," he said.