State Street index closes down sharply from a year earlier on drops in confidence in Asia, North America and Europe
Global investor confidence increased slightly on rising optimism in North America in December although it hovered just above an all-time low, capping a year of generally declining confidence, according to the State Street Investor Confidence Index.
The Global Investor Confidence Index rose 0.4 points to 80.9 in December from a revised figure of 80.5 in November, according to State Street. The revision of the November figure also means that the index declined in November to an all-time low and is still below October’s reading of 81.2 points.
At the end of 2012, the index is now down sharply from 94.5 points in December of 2011, and at the lowest level registered in the month of December since the index was created in 2003. The highest point reached this year was in July, at 94.3 points.
‘As has been true for some months now, global institutional investor confidence remains weak as institutions continue to shy away from equities,’ Harvard University professor Kenneth Froot, who helped develop the index, says in a news release.
‘In the past year institutions have bought assets directly linked to a reduction in European tail risks, such as peripheral bonds and European banks. However, there is little evidence that institutions are interested in rebuilding core equity allocations in a broad-brush manner to previous levels.’
North American investor confidence in December rose to 77.8 points from its record low of 72.4 in November, according to State Street. The North American index is closing the year well below its level of 89.9 from December of 2011.
Investor confidence also rose in Asia in December, climbing to 89.1 points from 85.4 in November. The Asian index, however, is also down sharply from a year earlier, when it was at 93.6 points.
The rise in the global index in December was diminished by receding optimism in Europe, where concern over the sovereign debt crisis lingers and is set to grind on into another year. State Street’s European Investor Confidence index, which spent seven of the past 12 months in positive territory, ended the year at 95.2 points, a sharp drop from 100.0 in November. The European index is also down from 101.7 at the end of 2011.
‘The Global ICI, and all three of the regional ICI measures, finished well down on the year,’ says index co-developer Paul O’Connell of State Street in the release.
‘North American investors displayed the most pessimism. With global dividend yields around 2.8 percent, and increasing talk of nominal GDP targeting among policy makers, we will be keen to observe whether there is a turnaround in equity flows in the New Year.’
