State Street Global Markets has released the results of the State Street Investor Confidence Index® (ICI) for April 2022.
The Global Investor Confidence Index decreased to 92.9, down 6.6 points from March’s revised reading of 99.5. The decrease was led by an 8.0 drop in North American ICI to 95.2 as well as a 6.7 drop in European ICI to 76.2. Meanwhile, Asian ICI rose 2.4 points to 92.0.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’ research and advisory services business, in partnership with FDO Partners. It measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors.
The index assigns 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.
“Risk Appetite continued to contract in March as the Global ICI fell just over 6 points, retracing almost all of its gains since the beginning of 2022,” commented Rajeev Bhargava, head of Investor Behavior Research, State Street Associates.
He continued: ”The increasingly hawkish stance from the Fed in the face of surging inflation coupled with dampened global growth expectations likely drove aggregate risk sentiment lower. Interestingly, Asia was the only region that witnessed gains this month. However, with COVID infection rates soaring in some regional markets and the resultant lockdowns impacting economic activity, it remains to be seen if this constructive path persists.”