State Street: The Global Investor Confidence Index increased to 93.9, up 2.0 points from February’s revised reading of 91.9..
Michael Metcalfe, head of Global Macro Strategy, State Street Global Markets.
The increase in Investor Confidence was driven by the European ICI, which rose 12.6 points to 90.7, and the North American ICI, which rose 1.1 points to 94.4. Meanwhile, the Asian ICI dropped 4.9 points to 93.2.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’s research and advisory services business, in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“The first quarter of 2021 has brought with it new challenges for investor confidence, in particular whether higher bond yields are simply reflecting the reflation trade or are a threat to it,” commented Michael Metcalfe, head of Global Macro Strategy, State Street Global Markets. “After seeing it fall sharply for two-months in a row, investors’ confidence, led by Europe, stabilized and rose modestly in March. While the overall level of the index suggests investors should remain watchful of risky assets, the modest improvement in confidence suggests they are learning to live with higher yields – for now at least.”