US election conclusion lifts investor confidence in November

The Global Investor Confidence Index’ (ICI) increased to 90.7 in November, up 10.6 points from its October’s revised reading of 80.1, driven by the rise in investor confidence in North America which jumped 10.6 points, according to State Street Global Markets (SSGM).

While the Asian ICI which also grew to 95.1 from 91.8, the European ICI fell for the second straight month and was down 1.8 points to 92.0.

SSGM’s senior macro strategist, Marvin Loh, said that the index saw the highest jump in November since June and it was the second best global reading of 2020.

“The gains were led primarily by an improving outlook in North America, which recorded its highest readings of the year on the back of the conclusion of the US election process and positive news regarding a COVID-19 vaccine,” he said.

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“Equity valuations reached new highs, with the Dow Jones poised to record its strongest monthly return of the year as value outperformed growth.”

However, he said, the risk appetite in Europe fell to its lowest levels of the year as surging virus cases resulted in another round of lockdowns and restrictions and, on top of that, ongoing Brexit negotiations and the EU budget impasse further sapped investor confidence, even though the majority of European bourses were set to report double-digit gains for the month.

The ICI, which was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners, measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors, with a reading of 100 being neutral.