State Street Global Markets said the State Street Investor Confidence Index declined to 83.9 for May 2005.
May’s reading was decreased by 5.5 points from April’s revised reading of 89.4.
“During May the confidence of institutional investors in equity markets fell substantially,” commented Paul O’Connell of State Street Associates. “This was particularly the case for U.S. investors, who have been reducing their exposures to risky assets across their portfolios. The risk appetite of Asian institutional investors, by contrast, improved somewhat.”
“These negative effects were strongest in the first two weeks of May,” Harvard University professor Ken Froot. “This is not too surprising, given the developments in the global debt markets. We are seeing investors moving strongly toward ‘safer’ assets, such as U.S. Treasuries, and away from corporate debt, where spreads have widened. Ratings changes, even after changes in fundamentals, appear to have important impacts on markets and prices.”