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Investor confidence down after glimmer of recovery
After a brief recovery in May, institutional investor confidence has taken a hit in June due to prospects of a further slowdown in China and increasing resource prices from Japan.
The latest State Street Investor Confidence Index dropped 5.1 points globally from its revised May reading of 104.3.
The decline was most evident in North American investors, whose confidence fell 5.8 points to 100.4 from a revised reading of 106.2. Asian investor confidence was also on the decline, falling 3.7 points to 93.2.
But somewhat surprisingly, it was European investors that boosted confidence levels with a sharp increase of 8.5 points to 87.9.
Index developer Kenneth Froot said improving European confidence levels were improving sharply, but off an extremely low base.
“A level of 87.9 still signifies risk aversion and the sales of equity positions persist, but European institutions have tempered the pace of such sales recently, perhaps in recognition of the fact that recent price moves have created more attractive valuations in certain sectors,” he said.
Froot said lowering confidence levels in other parts of the globe could be put down to the Japanese supply disruption and elevated natural resource prices.
He also would not rule out the prospect of further slowdown in China, as well as continuing difficulties with Greek sovereign debt.
AUTHOR
Ashleigh McIntyre
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