Investor confidence falls further in December

According to State Street’s Investor Confidence Index (ICI), the slight drop in global investor sentiment in December’s reading of 94.8 was attributed to drops in the North American and Asian ICI, which fell by 6.2 points to 94.9 and 2.8 points to 94.8, respectively.

However, this was offset by a high European ICI reading, which soared by 16 points to 96.9.

“After peaking in July this year, investor confidence has now fallen for five consecutive months, the last three of which have seen investors reduce their holdings of risky assets (an index reading below 100),” said State Street Global Markets senior managing director and head of global macro strategy Michael Metcalfe.

“While the broader economic outlook appears increasingly rosy, as captured by measures of consumer and business confidence, the more cautious nature of investors hints at a concern that financial markets may have already discounted much of the good news.”

ICI co-developer Kenneth Froot said that “healthy growth” in Europe and European Central Bank asset purchases may have lifted investor confidence.

“Although the index remains below 100, it seems that European-based investors are becoming less concerned that political risks could derail the strong economic performance across the region,” Mr Froot said.

The ICI, released on the last Tuesday of every month, is an index developed by the SSGX’s research and advisory arm, State Street Associates, and measures investors’ risk appetites by analysing their buying and selling patterns.