Global institutional investor confidence dips in January, State Street says
European and Asian institutional investors' confidence retreated at the start of 2017, according to State Street Global Exchange, amid worries about a stronger greenback, US trade protectionism and ahead of national elections in France and the Netherlands.
The financial services firm's global investor confidence index slipped 0.3 points from December's 94.1 to 93.8.
It's European ICI drove the fall, sliding 7.0 points to 92.9, while another for Asia retreated by 0.4 points to 108.1. The North American ICI on the other hand increased 2.0 points to 89.6.
State Street's gauge measured and defined changes in risk apettite on the basis of shifts to institutional investors' asset allocation to equities.
Hence, the greater the allocation the higher the risk appetite or confidence, with the 100-point level marking the threshold between rising or falling allocations to risky assets.
The firm also emphasised that unlike surveys, its indices were based on actual trades by institutional investors, as oppossed to opinions.
"Stretched valuations and geopolitical risk did not support global sentiment at the start of 2017. While financial markets crave political stability, political change is disruptive. With the new US Administration taking office mid-month, worries about trade policies and a stronger dollar have taken center stage in 2017," commented Ken Froot, one of the creator's of the index.
"It is noteworthy that after a more constructive vote of confidence by European investors in December, sentiment has moderated somewhat as the New Year started. Concerns surrounding the impending French and Dutch elections as well as a hard Brexit may have fueled this cautious tone," added Rajeev Bhargava, managing director and head of Investor Behavior Research at State Street Associates.