State Street Global Markets, the investment research and trading arm of State Street Corporation, today released the results of the State Street Investor Confidence Index for March 2008.
Global Investor Confidence rose by 4.8 points from a revised January level of 72.6 to reach 77.4. Amongst North American investors, confidence rose 5.4 points from 78.1 to 83.5, and risk appetite in other regions complemented this, with European investor confidence rising from 84.0 to 88.6, and Asian investor confidence rising from 85.2 to 88.0.
Developed through State Street Global Markets research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Director Paul OConnell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis by analyzing the actual buying and selling patterns of institutional investors.
The index is based on financial theory that assigns precise meaning to changes in investor risk appetite, or the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.
“This months confidence reading sees a continuation of the slow improvement in global institutional investor confidence since it registered an all-time low of 65.9 last December. The increases remain modest, and our data does not yet reflect the latest round of interventions by the US Federal Reserve, so caution is still the watchword,” says Froot.
“This months increase, though moderate, was relatively broad-based, as institutional investors in North America, Europe and Asia increased their allocations to equities somewhat. The allocations were discriminating, though, with financial and consumer discretionary stocks favored over technology and materials,” adds O’Connell.