Institutional investor confidence grows

growthGlobal investor confidence increased over the course of last month, though the mood was somewhat subdued in Asia, according to State Street Global Markets.

Measuring investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors, the index rose by two points to 97.2.

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

Investor confidence increased among both in North American and European investors, but it fell among those in Asia.

“This month was a case of two steps forward, one step back as strong reallocations to risk in late October and early November gave way to some pull-back from risky assets in the middle part of November,” says Kenneth Froot, a Harvard University professor, who helped to develop the index.

“To a large degree the ebb and flow was driven by persistent doubts about the way forward for European policy makers. At 97.2, global investor confidence is close to its 3-year median, signaling that investors are adopting a wait and see attitude at this midway point of the fourth quarter.”

The deterioration in investor confidence in Asia for the second month in a row suggests that the policy uncertainty around sovereign debt imbalances has impacted the prospects of the more growth-sensitive regions.

©2011 funds europe