Surveys

North American, European Investors' Confidence Rises, Asia Dips

Editorial Staff, May 4, 2020

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The index tracks the actual selling and buying actions of investors rather than simply measuring their opinions. The results shed light on how different parts of the world are showing varying attitudes around financial markets amid the pandemic.

Asian investment confidence fell in April although North American and European investors actually became a bit more optimistic, perhaps emboldened by the massive central bank stimuli, according to a monthly barometer from State Street

The Global Investor Confidence Index decreased to 73.0, down by 0.7 points from March’s revised reading of 73.7. The Asian ICI plummeted by 18.3 points, falling to 80.0 from 98.3 points. Meanwhile, North American ICI inched upward by 1.2 points to 68.0 and the European ICI rose from 95.5 to 102.8 points.

The index measures the actual buying and selling moves of investors rather than what they say in response to opinion polls, so it tracks their revealed preferences rather than just stated views. The methodology was crafted by State Street Associates, State Street Global Markets’ research and advisory services business.  A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.

“Investor confidence dipped slightly in April, largely driven by weaker sentiment for Asia,” Rajeev Bhargava, head of Investor Behavior Research, State Street Associates, said. 

“Despite an end of the lockdown in China, the Asia ICI fell to its lowest level since 2005, possibly a reflection of weaker economic data regionally and renewed concerns over the region’s ability to sustainably exit lockdown as cases resurface in previously locked-down countries. In contrast, however, US and Europe showed stability in investor appetite this month with Europe actually seeing a material rise in investor confidence. The unprecedented amount of stimulus central banks have injected into markets as well as signs of a slowing in new COVID cases locally seem to have had a stabilizing effect on risk behavior.”

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