Investor Confidence Rose in July by 7.9 points to 108.9

Confidence in North America Rose by 10 Points, while Cautious Market Participants and Corporate Debt Build-Up Lead to a Decrease in Confidence in Europe and Asia

The Global Investor Confidence Index increased to 108.9, up 7.9 points from June’s revised reading of 101. The improvement in sentiment was driven by a 10.0 increase in the North American ICI to 112.1. By contrast, the European ICI decreased by 4.3 points to 94.2 and the Asian ICI declined by 1.3 points to 96.0.

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.

“Continued improvements in global economic growth seem to have ignited institutional investors’ risk appetite,” commented Rajeev Bhargava, managing director and head of Investor Behavior Research, State Street Associates. “Strong earnings growth expectations and optimism grounded in the improving economic outlook have taken precedence over the rising anticipation of reduced central bank balance sheets and a more a hawkish tone.”