European investor confidence surges

Investor confidence climbed in January with investors in all regions but especially Europe showing more appetite for risk, data shows.

According to the State Street Investor Confidence Index (ICI) European investors’ confidence was most enthusiastic, surging 16 points to 113.4, while overall global investor confidence was up 6.4 points from December to 102.1.

The Asian ICI rose by 6.1 to 100.8 and the North American ICI went up 1.7 points to 97.2.

The ICI, which was developed by Kenneth Froot and Paul O’Connell at State Street Associates, measures investor confidence by analysing institutional investors’ buying and selling patterns. The greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral.

Froot said: “Global equities have seen the best start to a new year in three decades. Stocks are hitting all-time highs, earnings forecasts are rising, and positive earnings surprises have outweighed disappointments across global markets. Given this backdrop, it is not surprising that global institutional investor confidence is showing signs of optimism.”

Rajeev Bhargava, managing director and head of investor behaviour research at State Street Associates, added: “We seem to be witnessing a sense of confidence in Europe after two years of subdued risk appetite. Improving European economic growth, subsiding political uncertainties, and the European Central Bank’s accommodative policies are possibly feeding into stronger enthusiasm.”

©2018 funds europe

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