State Street: Investor Confidence Slips In December

Dec 30 2014 | 11:38am ET

The State Street Global Investor Confidence Indicator fell to 112.1 in December from 113.7 a month earlier.

Investors in Europe recorded the largest decline in sentiment, with the regional ICI falling 10.2 points from November’s revised level of 129.7, while in North America, the ICI fell by only 1.5 points to 102.6. By contrast, the Asian ICI rose by 1.7 points to 100.0.

“Long-term investors have been seeking exposure to risky assets for much of 2014, but this appetite has shown signs of diminishing in December as our Global ICI slipped to its lowest level of the year,” said State Street's Kenneth Froot in a statement. “While the collapse in oil prices should provide a substantial boost to real incomes in 2015, presently it has added to fears about the global growth outlook, prompting a modest pause in investors’ risk-seeking run.”

The index measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors and assigning a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.

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