Investor confidence in Europe jumped in August and reached its highest level since January last year, according to the latest State Street Investor Confidence Index.
The investor confidence index, or ICI, for Europe jumped 20.4 points to 106 in August. Investor confidence in North America also increased, although merely 2.1 points to 106.5. The global investor confidence index rose to 107.3 in August, up from 102.2 in July.
“Risk appetite in August continued on a positive path as the Global ICI rose just over 5 points to 107.3, largely fueled by an uptick in sentiment across US and in particular European investors,” said Rajeev Bhargava, head of Investor Behavior Research, State Street Associates.
Will enthusiasm persist?
“Despite the many potential headwinds, including rising inflation concerns and energy security facing the European economy, interestingly, European investors have moved from a risk averse posture to a more neutral posture over the past month as markets rallied through much of August.”
Even after the selloff over the past week, net flows by European investors have been from developed to emerging market stocks, which has driven up the confidence score, State Street noted. “However, it is going to be important to monitor whether the enthusiasm persists given recent heightened volatility in equity markets on the back of increasingly hawkish Fed speak.”
State Street said its index provides an objective, quantitative measure of global risk tolerance of the world’s sophisticated investors. The index is released every last Wednesday of the month.
State Street’s Investor Confidence Index:
