Europe confidence up, but investors remain risk averse

ConfidenceInstitutional investors are more confident about the investment outlook in Europe, November data shows, but confidence declined about global prospects.

State Street, which measures investor sentiment using its State Street Global Investor Confidence Index, says the level of confidence for investment in Europe rose by 6.3 points to 96.5 last month – though the reading below 100 still means investors remain risk averse.

Jessica Donohue, chief innovation officer at State Street Global Exchange, says the prospect of further monetary stimulus from the European Central Bank was the driver for rising confidence, but she warns that divergence in monetary policy at the global level is not enough to bring European sentiment above the index’s risk-averse threshold.

The index measures investor confidence, or risk appetite, by analysing the buying and selling patterns of institutional investors. An index reading of 100 points is neutral and below 100 means investors are risk averse.

Confidence globally is above the threshold, though sentiment declined by 7.2 points in November compared to the month before, to rest at 106.8. The declines were driven by a fall in US sentiment as the North American sub-index dropped by 11.9 points and the Asian sub-index fell by 9.3 points.

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