Global investor confidence slips in November with North America hit

Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange, on Nov 21, 2018.
Traders work on the floor at the closing bell of the Dow Industrial Average at the New York Stock Exchange, on Nov 21, 2018.PHOTO: AFP

SINGAPORE - Global investor confidence fell in November, with the decline led by North American investors.

The State Street Investor Confidence Index (ICI) slipped 1.7 points to 82.7, down from October's revised reading of 84.4.

Confidence among North American investors weakened further, with the category ICI decreasing from 81.6 to 79.2.

Meanwhile, the European ICI registered a marginal uptick of of 0.4 point to 91.9, and the Asia ICI rose 2.6 points to 102.2.

A reading of 100 is neutral, and represents the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.

"This month, it appears there was a reset in investor sentiment, and with the exception of Asia investors, it has severely reduced optimism amid recent market turbulence. And as result, managers are now strongly adjusting their risky-asset positioning," said Kenneth Froot, who co-developed the index.

The ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors; the greater the percentage allocation to equities, the higher the risk appetite or confidence. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors, State Street said.

 

Added Michael Metcalfe, senior managing director and head of Global Macro Strategy at State Street Global Markets: "While the sentiment of global consumers and purchasing managers is rolling over gently to reflect the potential of economic headwinds, investor confidence has posted one of its quickest deteriorations in a decade. Dramatic drops in August and September were a prophetic warning of the market volatility that has dominated the fourth quarter, and investor confidence has fallen again in November."