State Street Global Markets reported the results of its monthly investor confidence index, showing a 2.9 increase from April’s 83.0 index to 85.9 for May.
The confidence level for North American institutional investors increased dramatically, moving from 93.1 to 98.8.
By contrast, however, the confidence of European investors dipped from 96.4 to 91.9, and Asian investing confidence fell to 76.1 from 78.5.
Investor Confidence Index gauges investor confidence by analyzing buying and selling patterns of institutional investors. The index is based on a financial theory that assigns precise meaning to changes in investor risk sentiment, or the willingness of investors to hold proportionally more or less of their portfolio in equities, which translates to a willingness to take financial risks. The more institutional investors choose to devote their portfolios to equities, the greater their confidence, the index says.