Investor confidence at its highest level this year, says State Street

The Global State Street Investor Confidence Index rose by 7 points in June, reaching 93.5, its highest level this year, according to the results of the State Street ICI for June.

Risk appetite among North American institutional investors climbed 5.7 to reach 93.8 in June, while sentiment among European institutional investors rose 4.5 points from May’s level of 98.0 to reach 102.5.

Meanwhile, Asian investors displayed a more modest improvement in risk appetite, reflected in an increase of 1 in the Asian ICI from May’s final reading of 89.4 to 90.4 this month.

“Beginning around the middle of the month, we began to observe some concerted buying of equities by institutions, at a pace not seen for almost two years. The buying was relatively broad-based and diversified across sectors,” said Kenneth Froot, professor at Harvard University who developed the index with Paul O’Connell of State Street Associates.

He added that the appetite for global equities was strongest among European institutional investors.

“We can also see this in the sectoral decomposition of flows, which shows some rotation out of safe havens and into more risk-sensitive sectors. To some extent, the buying of US, UK and Asian equities by European institutions may say more about their euro-currency concerns than it does about high expected returns for those markets,” he said.

The index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors.

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