US investor confidence up, Asia down

US institutional investors appear to be growing in confidence, with the latest State Street Global Markets Investor Confidence Index rising again in May.

The index, released this week, rose by 0.5 points to 81.4, with confidence among North American institutional investors rising from 83.5 to 85.2 and European investor confidence rising from 73.4 to 81.6 on the index.

By comparison, the confidence of Asian investors fell 5.8 points to 79.4.

Commenting on the outcome, Harvard University professor Ken Froot said the upturn in the index was important.

“In spite of the distinct sources of risk that we see — energy prices, inflation in the US and other developed countries, rapidly weakening real estate markets and the global real economic slowdown, institutional investors overall are cautiously finding value at current price levels,” he said.

Foot said that while sentiment, particularly in the US, remained low, it was now well above the all-time lows the index had witnessed over the past 12 months.

The co-author of the index, State Street Associates director Paul O’Connell, said European confidence had been stronger during May, perhaps reflecting that the European Central Bank was likely to take a more pragmatic role in responding to the elevated levels of inflation that were plaguing Europe.

He said the situation in Asia was more pessimistic and that for the first time since the scare of early 2006, Asian investors were processing the choice between more currency adjustment and greater inflation over the coming year.