Global investor confidence up

Global investor confidence increased slightly in July, when a small rise in confidence among Asian investors offset declines in North America and Europe, according to the State Street Investor Confidence Index.

The global index rose 0.75 percent by July 31 to 94 points, from a revised 93.3 at the end of June, State Street Global Markets says in a news release.

The Asian Investor Confidence Index posted the only increase, rising 0.89 percent in the month, although the Asian index remains at the lowest level of all State Street Global Markets’ investor confidence indices.

‘The message being sent by institutional investors this month is one of caution,’ comments Kenneth Froot, the Harvard University professor who helped create the index based on samplings of institutional investors’ buying patterns, in a statement.

‘Although there was a small uptick in Asian investor confidence this month, on a relative basis, the index for that region remains the most bearish. Underlying this is a lack of enthusiasm for emerging markets and US equities in a world where economic growth is challenged.’

Sampling for the July index was taken before European Central Bank president Mario Draghi stirred optimism in capital markets by declaring he would do ‘whatever it takes’ to protect the euro.

The sampling also came mostly before a round of Asian news indicating a possible slowdown in that region, including economic shrinkage in Taiwan, a July manufacturing slowdown in China and declining South Korean exports.

Despite the increase in Asian confidence in July, Asian investors remain the most cautious, according to the report. The Asian index rose to 91, still nine points below the ‘neutral’ level of 100 that indicates investors are neither decreasing or increasing their exposure to ‘risky’ assets. The North American index dropped 0.6 points to 93.1 and the European index fell 0.5 to 101.7 points.

The increase in July marks a sharp slowdown from the pace of rising investor confidence in June, when the global index increased 6.8 points, or 7.86 percent, led by North American and European investors. State Street says the June increase indicates investors had ‘tempered their bearishness a little’.  

Global investor confidence has been rising every month, mostly in small increments, since April, when it ended the month at 87.1. The gains have been led by investors in North America, where confidence has risen from April’s 88.4 points. Still, the global index is down 9 percent from the level of 102.5 recorded at the end of July 2011.