Asia-Pacific (APAC) was the only region to see institutional investor confidence fall in May as animal spirits perked up in the rest of the world, new data from State Street shows.
According to the State Street Investor Confidence Index, APAC investors were slightly skittish in May as the bull-bear indicator dropped about 4 points to 88.4 over the month.
Since the beginning of 2019 the State Street APAC confidence index – a measure based on real trades rather than sentiment surveys – has fallen more than 10 points from the 99.9 reading in January.
Under the State Street scale a score of 100 represents a neutral tone with investors neither increasing nor decreasing exposure to risk assets.
As APAC investors eased off equities, however, all other regions saw the risk dial flicker upwards in May and for the calendar year to date. The European, Middle East and African (EMEA) region recorded the highest confidence level in May (92.5), surpassing APAC for the first time this year.
But the North American region experienced the biggest jump in confidence in the year so far, climbing from 65.7 in January to 76.7 in the latest State Street gauge: by contrast, the EMEA measure is up only 2.6 points for the five months to May.
Despite the overall global investor confidence score climbing almost six points in May to 79.5, the State Street indicator remains well below recent averages. The confidence-meter has been above 100 for 46 of the 72 months from June 2013 to May this year, peaking at 127.1 in June 2015.
In a statement, Kenneth Froot, who helped develop the State Street confidence gauge, said a number of global friction points such as Brexit and trade war worries had unsettled investors in May.
“Institutional investors have been wary, and with potential supply-chain disruptions and concerns about rising protectionism it is understandable that sentiment remains anchored in the risk-averse territory,” Froot said. “However, while the low level of the index points to risk-off behavior over the last few months, the solid uptick this month indicates some investors may be moving back in to buy the dip.”