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Investors in Europe & North America continue to shun risk assets

Investor confidenceInvestor confidence has shown a mild improvement over the past month, driven by an increase in investor risk appetite in Asian markets.

However, Europeans showed reluctance to increase allocations to equities.

The Global Investor Confidence Index, released monthly by State Street Global Exchange, has risen by 0.4 points to 71.3 over this period.

It represents a modest recovery when set alongside a V-shaped improvement in the price of risk assets.

Investors face growing political and economic risks, including a deterioration in US-China trade negotiations, the danger of a hard Brexit in the UK and fears around populist candidates securing victory in May’s European political elections.  

This continuing market uncertainty has discouraged European and North American investors from significantly raising their allocations to equities markets.

In Europe, the Investor Confidence Index (ICI) fell 7.8 points to 88.4 over the month. In North America, the ICI saw a slight rise of 1.9 points to 68.3.

Asian investors demonstrated a stronger appetite for risk assets, reflected in a 3.6 point rise in the Asian ICI to 100.0

The ICI measures investor confidence or risk appetite by assessing the buying and selling patterns of institutional investors.

A higher ICI figure reveals higher investor allocations to risky assets. A reading of 100 is neutral, indicating that investors are neither increasing or decreasing their allocations to equities and other risk assets.

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