Investor confidence plunges in US
Negative sentiment towards the US has pushed the Global Investor Confidence Index (ICI) down 5.6 points from September to 95.7, down from 101.3.
The October figures were released by State Street Global Exchange in their State Street ICI.
The figures showed the US ICI was well into pessimistic territory at 86.5.
But confidence has jumped among European institutional investors with a 10.2 point increase in the European ICI to 111.9.
"The fiscal showdown in the US clearly took the wind from the sails of institutional investors, pushing the Global ICI into negative territory for the first time since May of this year," State Street's Paul O'Connell said.
He said despite the "11th hour resolution" of America's immediate crisis, investors are still wary of the long-term fiscal policy that is yet to be negotiated, and the effect these negotiations will have on confidence.
Head of cross strategy research at State Street Global Markets, Michael Metcalfe, said the simultaneous fall in confidence in America and rise in confidence in Europe showed policy perceptions are changing between the two continents.
"With European confidence at its highest level since July 2007, investors hope that the worst of the Eurozone crisis is past. The US crisis of confidence, in contrast, may just be the beginning, unless policy uncertainty is reduced," he said.
The ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.
The index assigns a meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.
A reading of 100 is neutral, where investors are neither increasing nor decreasing their long-term allocations to risky assets.
AUTHOR
Staff Writer
Recommended for you
The latest budget papers have outlined a $10 million provision for ASIC greenwashing enforcement activity as well as funds for a sustainable labelling regime to be partially met by industry levies.
Betashares has expanded its fixed income solutions with the launch of a new ETF offering exposure to subordinated bonds issued by the big four Australian banks.
The latest monthly Bank of America global fund manager survey has found investors are starting to shift cash into bonds as cash allocations reach a three-year low.
AUSIEX analysis has discovered the net traded value of Australian dollar fixed income ETFs more than doubled from January to April, reflecting growing investor demand.
