State Street Global Markets today released the results of the State Street Investor Confidence Index (ICI) for May 2020.
The Global Investor Confidence Index increased to 73.3, up 0.3 points from April’s revised reading of 73.0. The increase was primarily driven by the European ICI, which rose 6.3 points to 108.6. Meanwhile the North American ICI and Asian ICI each dropped 0.3 points, to 67.8 and 80.5 respectively.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’s research and advisory services business, in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analyzing 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.
“The shifting focus from country lockdowns to restarting economic activity allowed the Investor Confidence Index to remain mostly unchanged in May,” commented Marvin Loh, senior macro strategist, State Street Global Markets.
“The slowing of COVID-19 cases in Europe and the phased restart of its most impacted economies lifted sentiment by 6 points, recovering most of the losses from the prior few months. Expectations of additional fiscal and/or monetary stimulus from Europe also contributed to the improving tone. However, the North America ICI was minimally impacted, as the progression of the virus is still on a path towards peaking, while concerns remain over reinfections as all U.S. states have at least begun to partially reopen.”