Global Investor Confidence Dipped In June

Editorial Staff

6 July 2021

A barometer of investors’ actual buying and selling behaviour shows that they cut back on risk in June, and their confidence took a knock from slightly increased prospects of US rate rises and some concerns about the Delta variant of COVID-19.

The State Street Investor Confidence Index®, produced by , for June came in at 96.3, a drop of 2.1 points from May’s revised reading of 98.4. Investor confidence declined across all regions, with Asian ICI suffering the most, falling by 9.0 points to 91.7. The North American ICI was down 3.4 points to 95.3, and the European ICI slipped 2.0 points to 91.0.

“Risk appetite dipped slightly in June as was evident by our Global ICI that ticked down a couple of points from its modified May reading,” Rajeev Bhargava, head of Investor Behavior Research, State Street Associates, said. “The move was partially driven by weaker sentiment from US investors, likely in response to heightened expectations of policy normalisation given the Fed's update to their dot plot guidance this month.”

“In addition, increased tightening fears out of China combined with greater uncertainly around the impact of the delta variant may have steered confidence sharply lower amongst Asia investors, with Asian ICI fully retracing its gains from the prior month,” Bhargava said.

The index 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.