Global investor confidence up in January, led by Europe

GLOBAL investor confidence rose in January, with the biggest jump coming from Europe, according to the latest data from State Street Global Exchange.

Its Global Investor Confidence Index increased to 102.1, up 6.4 points from December's revised reading of 95.7, as regions across the world showed an increased appetite for risk.

The Europe index went up by 16.0 points to 113.4, while Asia's index increased by 6.1 points to 100.8. The North American index rose 1.7 points to 97.2.

State Street's index 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.

A reading of 100 is neutral, meaning 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 actual trades, as opposed to opinions, of institutional investors.

"Global equities have seen the best start of a new year in three decades. Stocks are hitting all-time highs, earnings forecasts are rising, and positive earnings surprises have outweighed disappointments across global markets. Given this backdrop, it is not surprising that global institutional investor confidence is showing signs of optimism," said Kenneth Froot from State Street Associates, State Street Global Exchange's research and advisory services business.

Mr Froot, along with colleague Paul O'Connell, developed the index.