State Street investor confidence index at all-time low in October

A drop in European investor confidence has driven the State Street’s Investor Confidence Index (ICI) down to its all-time low in October.

The European State Street ICI fell 10.3 points last month, down to 94.9. This decrease caused a downward pressure on the whole index, driving it down to 80.6 from 87.3 the previous month.

Investors have significantly lost faith in the market since this summer, when the indicators were at the highest levels for the whole year. In June, the ICI reached 93.5.

European institutional investors were displaying a particularly strong appetite for global equities, encouraged by the rally on the markets.

In comparison, the confidence of institutional investors in October fell to its lowest levels since the inception of the index in 1998. It is even 1.5 points lower than its previous all-time low in October of 2008.

The risk appetites of American and Asia investors have also dropped last month, albeit not as dramatically as in Europe.

The index for American investors is down to 79.0 from 81.7 in September. Asian investor confidence has declined 2.9 points, down to 84.5.

Kenneth Froot, one of the two Harvard University professors that created the index, said: “Institutional investors continue to display a pronounced, almost secular desire to reallocate away from equities and towards fixed income and cash securities, and this desire has accelerated through the recent market correction.”

His colleague Paul O’Connell adds: “In 2008, the last time that global investor confidence was in this range, the regional pattern was somewhat different.

“North American institutional investor confidence was about 6 points lower, but Asian investor confidence was 10 points higher. This shift is reflective of the changed investment outlook, with improved US prospects offset by slowing growth in the Asian region.”

It remains to be seen how the upcoming global events, most notably the presidential election in the US coming up tomorrow, will impact the investment appetites of investors this month.

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