Investor confidence fell during the early weeks of 2019, with investor risk appetite contracting in North America, Europe and Asian markets.
The Investor Confidence Index (ICI), published monthly by Boston-based State Street Global Exchange, fell to 70.2, a 9.4 point decline from the December figure.
This loss of confidence was particularly marked for North American investors, where the index dropped 8.7 points to 66.8. The European ICI contracted by 2.6 points to 90.3 and the Asia ICI dropped 10.3 points to 100.2.
Co-founder of the Index, Kenneth Froot, said that these declines indicate a “warp-speed deterioration” in confidence. Although confidence is not at an all-time low, this month’s index reflects the “extraordinary rate of retreat hastily beaten by professional managers”.
This highlights concerns about current predictions for global growth and the trajectories of US monetary and fiscal policy.
While negative movement in the European and Asian ICI reflects rising recession risk in Europe and weaker data in China, the major decline in confidence among US investors is particularly striking.
“This panic, and it is no longer an exaggeration to use this term, is as much about bursting a bubble in US expectations, as it is about weakness in fundamentals outside of the US,” said Michael Metcalfe, head of global macro strategy at State Street Global Markets.
The ICI measures investor confidence or risk appetite quantitatively by analysing the buying and selling patterns of institutional investors.
A higher ICI number indicates higher investor allocations to risk assets. A reading of 100 is neutral, indicating that investors are neither increasing nor reducing their long-term allocations to risk assets.
©2019 funds europe
