Investor confidence down in August

The State Street Global Investor Confidence Index (ICI) decreased to 75.9, down 8.7 points from July’s revised reading of 84.6 and weakened across all the regions.

In North America ICI went down from 80.3 to 72.5, in Europe it fell to 89.0 from 98.6 and the Asian ICI fell from 91.8 to 89.2.

“In August, institutional investor sentiment declined once more against a backdrop of downside risks to the economy, increased political uncertainty in Italy, and the possibility of a hard Brexit,” Rajeev Bhargava, managing director and head of Investor Behavior Research, State Street Associates said.

“Monetary and trade policy uncertainty is reducing risk appetite, and investors are watching for changes in interest rate expectations following this year’s Federal Reserve conference in Jackson Hole." 

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Additionally, this month's investor confidence index results also reflected investors' growing concerns about the global economic slowdown and widespread declines in global manufacturing as the trade war between the world’s two largest economies continued to escalate, the firm said.

The index aimed to measure investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

Following this, the index assigned a precise 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; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.