Investor confidence decreased in January: State Street

State Street Global Markets has today released the results of the State Street Investor Confidence Index (ICI) for January 2021.

The Global Investor Confidence Index decreased to 100.7, down 3.8 points from December’s revised reading of 104.5. The fall in Investor Confidence was driven by a 7.3 point decline in North American ICI to 96.0.

Meanwhile, the European ICI and Asian ICI both increased, with European ICI rising 7.1 to 94.8 and Asian ICI rising 3.1 to 115.9.

The Investor Confidence Index was developed at State Street Associates in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

The index assigns a precise meaning to changes in investor risk appetite: 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.

“Investor confidence was generally stable in January with the Global ICI remaining near their highest levels in two years,” commented Marvin Loh, senior macro strategist at State Street Global Markets.

“Vaccine roll-outs and the prospect of additional stimulus in the US provided a supportive backdrop for risk to start the year. However, increases in the number of new Covid cases and uneven vaccination roll-out efforts have hindered further gains, with regional changes reflecting these differences.

“The decline in confidence in North America stands in contrast with the continued improvements in Asia, which has been buoyed by a more rapid return to economic expansion relative to western countries. The pace and efficacy of vaccine efforts over the coming months will certainly set the tone for investors at the start of this new year.”