Investment Strategies
Global Investor Confidence Wanes In July - State Street

Investor confidence fell in all regions of the world in July.
Investors were less upbeat over the market outlook in July this
year, as demonstrated by their buying and selling conduct during
last month, a regular barometer of such activity shows. The
report came out a day after the US Federal Reserve cut interest
rates by 25 basis points.
The Global Investor Confidence Index, as assembled by State
Street Global Exchange®, part of US-based State Street, fell to
84.9, down by 2.4 points from June’s revised reading of 87.3.
Investors across all regions expressed a waning appetite for
risk. The North American ICI fell from 81.6 to 80.6, the European
ICI from 103.3 to 99.3, and the Asian ICI from 95.9 to 91.9.
While some figures show that the US economy is in strong shape
with low unemployment and relatively little slack in the system,
worries about deteriorating global trade, and other factors,
encouraged the US central bank to cut rates, as happened
late on Wedneday.
The index measures investor confidence or risk appetite
quantitatively by analysing 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 of allocation to equities, the higher the 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 minor stumble in investor confidence is notable not just
because it runs counter to the new highs made in the prices of
some risky assets, but because confidence fell in all three
regions, albeit by different amounts,” Michael Metcalfe, senior
managing director and head of Global Macro Strategy, State Street
Global Markets, said.
“Investors may not be bound by the same supply chain linkages
that global manufacturing is, but the risk of contagion remains.
The fact that confidence fell the furthest in the APAC region is
perhaps testimony to questions of how much stimulus will be
forthcoming from policymakers in the region,” he continued.