Global investor confidence slides in Nov

Singapore

GLOBAL investor confidence fell in November, with the decline paced by North American and Asian investors.

According to the State Street Investor Confidence Index, the global index fell to 114.0, down slightly by 1.8 points from October's revised reading of 115.8. The North American index fell 4.4 points to finish at 104.3, down from October's level of 108.7, while the Asian index fell 2.7 points to 96.9.

"The increase in market volatility seen in October has tempered some of the enthusiasm that North American investors have for risky assets," said Jessica Donohue, head of research and advisory services at State Street Global Exchange. "While the major equity indices have recovered from their recent dive and again are at all-time highs, there is a renewed appreciation for the fragility of growth outside the US, and the risk that deflation represents."

European investors bucked the downward trend, however. The European index registered a large increase of 20.7 points to finish at a record high of 141.9.

This, said Paul O'Connell, one of the two developers of the index, mirrors the increase observed in September. "An examination of the underlying data indicates that investors in Europe are being selective. While there are strong inflows into UK equities, there is less enthusiasm to allocate to equities in other regions. Accordingly, some portion of the recent increase may well turn out to be transitory."

The investor confidence index measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. It 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, that is, the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.