European, US investors show confidence divergence, State Street finds

Global investor confidence remained constant in November, following an increase in October, according to the latest reading of the State Street’s Investor Confidence Index for the month.

Even if the Global confidence was at 81.2 in November, unchanged from the previous month, State Street found a geographical divergence.

European institutional investor confidence gained back half of last month’s loss, rising 5.0 points to 99.9 from October’s revised reading of 94.9.

By contrast, confidence among North American institutional investors fell 6.3 points to a record low of 72.3.

Among Asian investors, risk appetite was relatively stable, ticking up 1.4 points from October’s reading of 84.5 to settle at 85.9.

A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their allocations to risky assets.

“Globally, institutional investor confidence remains quite weak as institutions continue to reallocate away from equities and into fixed income securities. We did note some signs of stabilization in flows in the latter part of this month’s sample, especially with regard to Europe ex-UK markets, but overall the tone remains quite subdued,” said Harvard University professor Kenneth Froot, who developed the index with Paul O’Connell of State Street Associates.

O’Connell added: “The improvement in prospects for the Eurozone region has coincided with an uptick in the risk appetite of European investors. However, North American institutional investors are particularly risk-averse at the moment as the focus has shifted from the US presidential election to concerns around the fiscal cliff and the potential for instability in the Middle East.”

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