North American investor sentiment sets all-time low on looming fiscal cliff, Middle East tensions
Global investor sentiment hovered just above a record low for a second straight month in November as growing concerns about instability in the Middle East and the US fiscal cliff offset a slight increase in optimism over the European sovereign debt crisis, according to State Street Global Markets.
The Global State Street Investor Confidence Index remained at 81.2 points in November, the same level as in October when it dropped to the current level, near the lowest since the index began in 2003, State Street says.
That level is higher only than the all-time low of 81.1 points set in October of 2008 at the height of the financial crisis. State Street originally reported last month’s index level at a record low of 80.6, but revised it after further calculations.
‘Globally, institutional investor confidence remains quite weak as institutions continue to reallocate away from equities and into fixed income securities,’ says Harvard University professor Kenneth Froot, who helped develop the index, in a statement.
‘We did note some signs of stabilization in flows in the latter part of this month’s sample, especially with regard to Europe ex-UK markets, but overall the tone remains quite subdued.’
Civil war in Syria, growing tensions between Israel and Iran, fighting in Gaza and political turmoil in Egypt have raised concerns over stability in the Middle East in November while the results of the US election gave way to greater uncertainty over the so-called ‘fiscal cliff’ the US is facing at the end of this year.
In the meantime, fears sparked by Europe’s sovereign debt crisis have faded slightly, at least temporarily, amid the perception of strong action by the ECB and others.
The North American Investor Confidence Index fell 6.3 points to a record low in November of 72.3, State Street Says.
The index for Asia was comparatively little changed, gaining 1.4 points, at 85.9 points while the European index jumped 5.0 points to 99.9 points.
The State Street indices measure investor confidence, or risk appetite, by analyzing buying and selling patterns of institutional investors. A reading of 100 is neutral, while below 100 indicates a reduced appetite for risk.
