Confidence in stocks declines despite Wall Street records

BOSTON (dpa-AFX) – Investor confidence fell somewhat in October, according to a study. Global investor confidence as determined by State Street Bank – illustrated by the Investor Confidence Index (ICI) – fell 0.9 points from September to 79.2 points. In September, investors were even more optimistic.

Falling investor confidence in North America and Asia was the reason for the recent gloom, while European investors were again much more confident. “Despite new highs in the stock market, US investor confidence continued to decline in October,” said Marvin Loh, senior macro strategy strategist at State Street Global Markets. And despite a more accommodating US Federal Reserve, heightened geopolitical risks from elevated US stock valuations appear to be having a negative effect on investor sentiment for now.

Kenneth Froot, State Street Associates, added: “The huge increase in European investor confidence is largely driven by the return to UK assets.” Institutional investors appeared to believe that the UK’s leading index, the FTSE 100 offers a short-term buying opportunity after the recent price drop.

The Investor Confidence Index quantitatively measures investor confidence or risk tolerance by examining the actual buying and selling behavior of institutional investors. The index assigns precise meaning to changes in investors’ risk appetite: the higher the percentage allocation between individual securities, the greater the risk appetite or confidence. A value of 100 is neutral; it is the level at which investors do not increase or decrease their long-term exposure to high-risk assets.

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