Investor Confidence Index Declines To 84.7 In December, Says State Street

State Street Global Markets, the investment research and trading arm of State Street Corporation, released the results of the State Street Investor Confidence Index for December 2005. According to the December index, investor confidence decreased to 84.7 from November's revised

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State Street Global Markets, the investment research and trading arm of State Street Corporation, released the results of the State Street Investor Confidence Index for December 2005.

According to the December index, investor confidence decreased to 84.7 from November’s revised reading of 87.5. Looking regionally, the confidence of North American institutional investors fell slightly to a revised reading of 101.6 in December from 103.3 in November. European and Asian investors displayed lower confidence, with the European Index falling more substantially from 71.4 to 63.8, and the Asian Index declining from 84.3 to 76.7.

Developed through State Street Global Markets’ research partnership, State Street Associates (SSA), by Harvard University professor Ken Froot and SSA Director Paul O’Connell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis, analyzing actual buying and selling patterns of institutional investors.

“We are seeing greater concerns among institutional investors surrounding their willingness to acquire additional risky assets across their portfolios,” commented Froot. “Our confidence measure detects substantial weakness in risk appetite around the world, in tandem with the recognition that inflation-fighting interest rate increases by major central banks are likely to spell lower growth going forward.”

“While the U.S. has been the central focus of central bank tightening, we can see that confidence has declined most strongly for European and Asian investors,” stated O’Connell. “Indeed, after almost one full year of examining this regional information, we have reached the lowest level yet recorded for Asian confidence and the second-lowest for European confidence. If inflation pressures mount, we could see further reductions in confidence.”

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