Global Investor Sentiment Ended 2022 On A Cautious Note

Editorial Staff

2 January 2023

Investors ended 2022 on a more downbeat note than in the previous months amid worries that a recession is more likely, exacerbated by China’s easing of Covid controls leading to a rapid spike in infections, a barometer of sentiment shows.

State Street Global Markets’ Global Investor Confidence Index fell to 75.9, down 14.4 points from November’s revised reading of 90.3. The decrease was led by a 16.4-point drop in the North American ICI to 72.2 as well as a smaller 4.1-point drop in the Asian ICI to 86.9. The European ICI, meanwhile, rose 10.8 points to 102.6.

“The decline was most pronounced in North America, which fell 16.4 points to 72.2, levels last seen in Spring 2020 on growing recessionary concerns. Investor appetite in Asia also deteriorated, with a rapid escalation in Covid cases in China as the government has quickly abandoned its strict health protocols,” Marvin Loh, senior macro strategist at State Street Global Markets, said. “Nonetheless, the 4.1-point decline in the Asia ICI to 86.9 was not as dramatic as the fall in North America. The ICI reading for Europe bucked the overall negative trend, rising 10.8 points to 102.6, its second-highest reading of the year as stable fuel costs and growing comfort that the continent could avoid the worst-case scenario in its ongoing energy emergency.”

The index measures investor confidence or risk appetite quantitatively by analyzing 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.