US investor confidence hits record lows
Global investor sentiment was flat in November, with record low levels of confidence in the US offset by a boost in Europe, according to the latest State Street Investor Confidence Index (ICI).
The ICI measures the risk appetite of institutional investors. A reading of 100 is neutral: it is "the level at which investors are neither increasing nor decreasing their allocations to risky assets", according to State Street.
The global ICI was 81.2 in November, unchanged from October. European institutional investors regained half of October's loss, with confidence up 5 points to 99. Risk appetite among Asian investors was stable, rising 1.4 points to 85.9.
But confidence among North American institutional investors fell 6.3 to hit a record low of 72.3.
State Street Associates' Paul O'Connell said investors in the US were particularly risk averse at the moment because the focus has shifted away from the presidential election and towards Middle East insecurity and concerns about the 'fiscal cliff'.
According to Harvard University professor Kenneth Froot, who developed the ICI with O'Connell, global institutional investor confidence remains weak as institutions continue to reallocate away from equities and fixed income securities.
"We did note some signs of stabilisation in flows in the latter part of this month's sample, especially with regard to Europe ex-UK markets, but overall the tone remains quite subdued," said Froot.
O'Connell added: "The improvement in prospects for the Eurozone region has coincided with an uptick in the risk appetite of European investors, bringing the European Confidence Index back close to the neutral level of 100."
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