Investor Confidence Declined in June by 1.6 points to 101.0

State Street Global Exchange released the results of the State Street Investor Confidence Index® (ICI) for June 2017.

The Global Investor Confidence Index declined slightly in June. The Index now stands at 101.0, down from May’s revised reading of 102.6. Confidence among both Asian and North American investors declined, with the Asian ICI falling 4.4 points to 97.1, and the North American ICI falling 2.0 points to 102.2. Meanwhile, the European ICI increased by 1.7 points, from 96.8 to 98.5.

The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. 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.

“May’s note of optimism after months of de-risking did not strengthen in June, with the Global ICI numbers hovering over the neutral 100-level mark,” commented Ken Froot. “Even in North America, while the index remains in a ‘risk-on’ territory, the decline in investor confidence was likely driven by intensified concerns around overvaluation, oil prices and the US energy policy, as the Fed delivered its second rate hike in 2017.”

“Sentiment remains rather subdued across regions as investors do not appear to enthusiastically endorse the steady climb of risky asset valuations,” added Timothy Graf, head of Macro Strategy, EMEA, State Street Global Markets. “The neutral read on investor behavior disproves the notion of market complacency in the face of many latent risks.”