Global investor confidence rose slightly in June despite the continuing turmoil in financial markets, according to State Street Global Markets.
European investors’ confidence rose particularly strongly, to 81.6 from 73.4 points, according to the data, which measures investor confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors.
On a global basis, these institutional investors saw past soaring oil prices and other downbeat news to push State Street’s overall Investor Confidence Index up by 0.5 points to 81.4, from a revised May level of 80.9.
North American institutional investors were rather less bullish than their European counterparts, with their confidence rising 1.7 points to 85.2.
“While not quite as big as the bounce seen after August 2007, this month’s increase is important,” says Ken Froot, a Harvard University professor who developed the index with State Street Associates director Paul O’Connell Froot.
“In spite of the distinct sources of risk that we see – energy prices, inflation in the US and other developed countries, rapidly weakening real estate markets, and global real economic slowdown, institutional investors overall are cautiously finding value at current price levels.
“While sentiment, particularly in the US remains low, it is now well above the all-time low points the index has witnessed in the last year.”
O’Connell said the blip in European investor confidence may reflect a belief that the European Central Bank will “take a more pragmatic role in responding to the elevated levels of inflation that plague Europe ”.
But he said the situation in Asia “is quite a bit more pessimistic” with confidence levels falling by 5.8 points to 79.4.
“For the first time since the scare of early 2006, Asian investors are processing the choice between more currency adjustment or greater inflation over the coming year. Neither is going to be easy -- it’s a timely and sobering reckoning that is taking place.”IFAonline
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