Asia's investor confidence dips amid global rise, says State Street

Investor appetite in Asia and North America fell in September this year amid a rise in investor confidence globally, State Street's Investor Confidence Index (ICI) said on Wednesday.

In September 2014, compared to a month before, Asia's ICI retreated 4.5 points to 97.1; North America's ICI fell 5.1 points to 103. The global ICI increased 3.8 points to 123.9 and Europe's ICI surged 12.6 points to 140.

Based on actual trades, the greater the percentage allocation to equities, the higher the investor's risk confidence. A reading of 100 is neutral and indicates that investors are neither increasing nor decreasing their long-term allocations to risky assets.

Developed by Kenneth Froot and Paul O'Connell at State Street Associates, State Street Global Exchange's research and advisory services business, the ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.

From an Asia perspective, it seems investors are still focused on the growth slowdown story, which makes risky assets such as equities look expensive, said State Street's Asian head of sales & trading and research Jeremy Armitage.

"While there are definite specific risks in China around real estate and related debt, I suspect it is the second-round effect of an end to the construction boom that would be foremost on investors' minds," he said.

Mr O'Connell said: "The most striking element of this month's results is the increase in the European ICI, to a level of 140, an all-time high for the index.

"Despite the visible evidence of relatively poor growth performance across Europe, investors are expressing demand for equity as opposed to fixed-income investments in the region. This may partly be driven by the relatively favourable valuations currently reflected on European bourses."