Global investor confidence is edging upwards to the neutral point in a key index, suggesting risk appetite is increasing.
The State Street Investor Confidence Index for April increased to 99.5 points, up from 96.9 (revised) in March.
At 100, the reading is neutral, the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.
Confidence among European and North American investors improved, while confidence declined among Asian investors.
The European index rose from 94.8 to 96.1, though the Asian index – already above 100 – declined by 5.1 points to 104.7.
Last month, European confidence had jumped 11.5 points.
The index measures investor confidence or risk appetite quantitatively by analysing the buying and selling patterns of institutional investors. The greater the percentage allocation to equities, the higher risk appetite or confidence.
Kenneth Froot of State Street said: “Our measure of the global investor confidence has been on the uptick for two consecutive months and resonated with the improving global growth outlook and expectations of higher inflation. Still shy of the 100 level mark, investors’ risk appetite appears to be on hold as they await details of a new US tax plan and a possible resurrection of health care reform act.”
April’s index was calculated before France went to the polls, but State Street said it was telling that European investor confidence was still edging higher even then to mark the second consecutive monthly gain.
The suggestion is that concerns at the start of the year about European political risk, along with weak growth, “may have been overplayed”.
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