Institutional investors slightly less cautious in February: State Street

Shipping containers from China and other nations being unloaded at the Long Beach Port in Los Angeles, on Feb 16, 2019.
Shipping containers from China and other nations being unloaded at the Long Beach Port in Los Angeles, on Feb 16, 2019.PHOTO: AFP

SINGAPORE - Global investor confidence was slightly less cautious in February from the previous month, according to State Street's global investor confidence index.

The index, measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors, improved 1.5 points to 70.9 in February from January's revised reading of 69.4, State Street said on Thursday (Feb 28). The greater the percentage allocation to equities, the higher risk appetite or confidence.

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. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

Kenneth Froot at State Street Associates, who developed the index, said: "Institutional investors remained cautious in February, continuing to show hesitance toward riskier assets. With lingering growth and trade policy uncertainty, it appears that the more dovish Fed and the hopes for progress on the US-China trade front are not enough to tip the scales."

Rajeev Bhargava, managing director and head of Investor Behavior Research at State Street Associates said: "Global institutional investor confidence has exhibited little signs of recovery following last month's sharp decline in the investor confidence index. Although cross-asset volatility has tempered, the crude memories of the fourth quarter's market decline, along with increasing growth concerns in Europe and China, place headwinds on investor confidence."