Global risk appetite continues upward trajectory

European investor confidence grew modestly in February, while confidence in Asia has fallen in the past month, figures from the latest State Street Investor Confidence Index (ICI) show.

Global risk appetite continues upward trajectory


European institutional investor confidence increased 2.8 points to 92.2, as its Asian counterpart tumbled from 91 points in January to 85.5.

The global Index rose 8.7 points, settling at 94.8, spurred on for a second month by swelling confidence among US institutional investors.

The US Index surged to a 19-month high as investors added to equity positions in Japan, Europe ex-UK and the emerging markets. The index reached 99, a 13.9 point increase from January’s revised level of 85.1.

The indices measure investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. They then assign a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.

Prof. Kenneth Froot, one of the developers of the indices, said: “Since reaching a record low in November, the appetite for risk has rebounded considerably. There are a number of risks on the horizon that may give investors pause, including US fiscal negotiations, the outcome of the Italian elections and the direction of Fed policy, so caution is warranted. That being said, it’s fair to say that strong and persistent ‘de-risking’ by institutions that has characterised recent years has been suspended, at least for now.”


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