While commentators squabble over whether the credit crunch is dead or alive, investors "have already moved on", research suggests.
According to State Street Global Markets, global investor confidence climbed 8.7 points from 72.3 in May; the ninth highest month-on-month rise in the survey’s 117 month history.
It suggests north American investors have been the key drivers for the increase, as their risk appetite climbed eight points from 77 to 85.
However, the index says in other regions confidence levels saw negligible changes from the previous month, with European investor confidence falling by 0.5 points to 76.3 and Asian investor confidence rising 0.2 to 86.4.
Andrew Capon, editor-in-chief at State Street, says: “Rather like medieval schoolmen squabbling over how many angels can fit on the end of a pin, policymakers and commentators have been engaged in debate over the fate of the credit crunch in the past few weeks.
“US Treasury secretary Hank Paulson was one of the first to declare [the] crisis over and he was soon echoed by the Bank of England. European Central Bank governor Jean-Claude Trichet disagrees and so does the deputy managing director of the International Monetary Fund John Lipsky.
“Whilst the cut and thrust of debate is no doubt entertaining for the protagonists, institutional investors seem to have already moved on.”
State Street’s Investor Confidence Index analyses the willingness of investors to allocate their portfolios to equities. The more of their portfolio that institutional investors are willing to devote to equities, the greater their risk appetite or confidence.
Harvard University professor Ken Froot says: “While not quite as big as the bounce seen after August 2007, this month’s increase in global confidence represents a significant move.
“It continues the improvement in sentiment that our Index first registered in January, and suggests that the outlook of institutional investors is brighter than it has been for some time.”
State Street associates director Paul O’Connell adds: “With European confidence remaining essentially flat this month, we note something of a divergence in the timing of the cycle on each side of the Atlantic.
“The confidence of European institutions remained buoyant right up through the first quarter, prompting some talk of ‘European de-coupling.’
“Our latest data suggests that it is not so much that Europe is de-coupled, as it is that Europe is delayed relative to the US in experiencing the effects of the current slow-down.”
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