Investor confidence has decreased 1.2 points for the month of September, according to State Street Associates, the research unit of State Street Global Markets.
The Investor Confidence IndexSM lowered to from August’s revised reading of 86.5 to 85.3. Developed by Harvard University professor Ken Froot and Paul O’Connell of State Street Associates, the index shows that in September the risk appetite of institutional investors resumed the downward trend that was interrupted in August.
“Institutional investors are registering their concerns about growth and the level of current prices,” said O’Connell. “Even in the context of falling long-term dollar interest rates and oil prices, the appetite for risk-taking remains subdued. Technology is no longer a concentrated place of weakness; this month we see slightly lower inflows across many sectors.”
“Last autumn, there was a strong sense of optimism, building on hopes of renewed growth and low inflation,” commented Froot. “Beginning in January 2004, that gave way to a protracted regime in which professional investors repeatedly cut back on risk. They saw more moderate growth, sustained future interest rate increases by the Fed, growing concerns with commodity and energy prices, global uncertainty, and a U.S. election without a clear national favorite. We don’t yet see what the catalyst will be for breaking the current logjam in investor confidence.”