After a buoyant five-month stretch global institutional investor confidence dipped into negative territory in October, according to the latest State Street Global Exchange data.
The monthly State Street ‘Global Investor Confidence Index’, which analyses actual institutional trading patterns rather than subjective surveys, fell below the neutral 100 score in October, indicating a souring market mood.
In a statement, Ken Froot, co-founder of the group’s research arm, State Street Associates, said the October index measure of 96.9 (down from 104.4 in September) represented “a plunge in global investor sentiment to levels last seen in March of this year”.
“Investors may be factoring in the effects of monetary policy normalisation and the potential for a more hawkish chair at the Federal Reserve,” Froot said. “Concerns may also be surfacing over the impact of a stronger US dollar on emerging Asian markets.”
He said rising geopolitical concerns also had potential to dent investor confidence over the rest of 2017.
The State Street index, which rates risk appetite based on actual institutional investor allocation to shares, found confidence fell across the three regions it measures with North America seeing the biggest decline of 8.7 points to register 96.8 in October. The Asian benchmark also dropped below 100, falling 6.7 points to 96.2, while the already downbeat Europe index edged down from 93.8 in September to 93.1 a month later.
Since January 2010 the State Street index has ranged from a low of 80.5 in November 2012 to 127.1 in June 2015. The index recorded an unbroken run above 100 over January 2014 to June 2016 before dipping below neutral for 10 months in a row.
State Street says its investor confidence index avoids some of the problems associated with measurements based on surveys such as timeliness and sample bias.
“Actual investor holdings and recent purchases provide a solid foundation on which to base a measure of investor confidence,” State Street says