Global investor confidence dips in Dec to 2008 crisis levels: State Street
Singapore
GLOBAL investor confidence continued to fall in December, marking a decline comparable to conditions during the global financial crisis, researchers said.
The State Street Investor Confidence Index (ICI) retreated to 79.8, down 2.8 points from November's revised reading of 82.6 and representing the fifth straight month of deteriorating sentiment. North American investors led the decline as the North American ICI decreased to 74.1 from 79.2.
On the other hand, the European ICI ticked up 2.1 points to 94.0, while the Asia ICI added 8.7 points to 110.6.
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.
"Differences between the Fed and market observers over the importance of quantitative tightening exacerbated the anxiety for markets already on edge from trade disputes, Chinese growth and a slowdown in corporate earnings growth," said Kenneth Froot, who co-developed the index.
He added: "In fact, the global ICI's low level in December reveals a recent decline that is comparable in severity to what occurred during the global financial crisis."
Said Rajeev Bhargava, managing director and head of Investor Behavior Research at State Street Associates: "Global markets have faced sharp declines in the fourth quarter of 2018, continuing to dent investor confidence, and as we head into 2019, institutional investors will likely have a keen eye on global growth concerns and potential geopolitical headwinds."
The ICI measures investor confidence or risk appetite 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 also differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors, State Street said.
