State Street Global Markets has released the results of the State Street Investor Confidence Index® (ICI) for March 2023.
The Global Investor Confidence Index increased to 81.4, up 3.8 points from February’s revised reading of 77.6. The increase was led by an 11.0 point rise in European ICI to 117.5, along with a smaller 0.9 point increase in North American ICI to 73.9.
Asian ICI, meanwhile, fell 6.3 points to 91.9. The Investor Confidence Index was developed at State Street Associates, State Street Global Markets research and advisory services business. 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.
“In the face of heightened stress in the US banking sector, institutional investors continued to take a defensive stance with the Global ICI posting at 81.4 in March, well under the risk neutral level of 100,” commented Rajeev Bhargava, head of Investor Behavior Research, State Street Associates.
“While the aggregate sentiment remained weak, it is important to report that investor confidence did not deteriorate further in March but actually firmed a touch, with our global measure gaining around 4 points.
Indeed, the North American ICI remained steady through March albeit at weak levels, possibly supported by talks that the FDIC will extend insurance to all deposits, and in Europe investor optimism climbed sharply higher. With Asia being the only region that witnessed a decline is sentiment, the behavior of institutions in March demonstrated some level of resilience to the recent bout of market volatility.”
The index is released globally at 10 a.m. Eastern time in Boston on the last Wednesday of each month.
