State Street’s Global Investors Confidence Index fell from September’s revised level of 87.3 to 80.6, a fall of 7.7% in October.
The component indices fell by 10.3 points (Europe), 2.7 points (US) and, falling to 84.5, its lowest point since the creation of the index, 2.9 points in Asia.
The index uses genuine buying and selling patterns of institutional investors and was designed by Harvard University professor Kenneth Froot and State Street’s Paul O’Connell. They have given a reading of 100 as neutral so anything below this figure indicates a lower allocation to risk assets.
Froot commented: “Globally, institutional investor confidence is at the lowest level it has been since the inception of the ICI in 1998 and this month’s reading is 1.5 points below the previous low set in October of 2008.
“Institutional investors continue to display a pronounced, almost secular desire to reallocate away from equities and towards fixed income and cash securities, and this desire has accelerated through the recent market correction.”
O’Connell added: “In 2008, the last time that global investor confidence was in this range, the regional pattern was somewhat different. North American institutional investor confidence was about 6 points lower, but Asian investor confidence was 10 points higher.
“This shift is reflective of the changed investment outlook, with improved US prospects offset by slowing growth in the Asian region. The net effect is that institutional investors have little appetite for risky assets.”
