North American confidence leads increase as European optimism wanes
Global investor confidence increased in February as sustained optimism in North America more than offset a slight drop in confidence in Europe.
The Global Investor Confidence Index (ICI) rose 8.7 points to 123 at the end of February, according to State Street Global Exchange. The North American ICI led the increase, rising 12.3 points to 125.5 from a revised 113.2 in January, as equities price drops in late January and early February prompted many institutional investors to buy into the market.
The European ICI dropped 2.2 points in February to 110.6 from January’s revised reading of 112.8 amid political tensions in Ukraine and elsewhere, as well as renewed concern over the pace of Chinese economic growth and the possibility of a hard landing. The Asian ICI climbed 3.3 points to 106.6 from the January reading of 103.3. Still, all three ICIs were above the neutral reading of 100 points for a second straight month.
‘Our data does reveal regional weakness, notably in lackluster demand for European ex-UK equities, but overall suggests institutions are adhering to their strategic plans, albeit with a slight defensive tilt to their sector allocation,’ says State Street’s Paul O’Connell, co-developer of the index, in a media release.
‘We have seen institutions make meaningful additions to their equity holdings and this trend has remained intact despite questions about credit tightening in China, the pace of growth in the US, and policy upheaval in Turkey, Argentina, Thailand and Ukraine.’
But the 8.7-point gain in the Global ICI marks a slowdown from the increase of 18.6 points in January that led the Global ICI to a four-year-high.
‘Weaker US economic data and troubles in emerging markets sparked a dramatic correction in global equities in late January and early February, but longer-term investors did not panic,’ says Michael Metcalfe, senior vice president and head of multi-asset strategy at State Street Global Markets. ‘Instead, they used the sell-off in risk assets as a buying opportunity.’
