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Boston, August 31, 2010 – State Street Global Markets, the investment research and trading arm of State Street Corporation (NYSE:STT), today released the results of the State Street Investor Confidence Index® for August 2010.
Globally, Investor Confidence fell 4.4 points from July’s revised reading of 96.5 to 92.1. Confidence decreased in North America, dropping 5.7 points to 95.3 from July’s revised reading of 101. Confidence also decreased among European investors dropping 1.2 points from 99.9 to 98.7, Asia followed suit with confidence ticking down 1.6 points from 103.8 to
102.2.
Developed through State Street Global Markets’ research partnership, State Street Associates, by Harvard University professor Ken Froot and State Street Associates Paul O’Connell, the State Street Investor Confidence Index measures investor confidence on a quantitative basis 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 is risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing or decreasing their 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.
“This month, the Global Investor Confidence Index gave back the modest gains recorded last month, providing evidence that institutional investors remain non-committal in the face of a weaker macroeconomic backdrop,” commented Froot. “August marks the fifth consecutive month that the Index has remained below the neutral level of 100. Despite the relative
strength of corporate balance sheets, question marks remain over the slow pace of economic recovery and the relative efficacy of policy measures to spur that recovery.”
“Consistent with the pattern of recent economic data, investor confidence in Europe and Asia held up relatively well in August and Asian confidence remains in the `risk accumulation’ range above 100,” added O’Connell. “That said, there are clearly doubts about the source and strength of aggregate global demand in the near term. Our underlying
data shows that flows into both developed and emerging markets were in the bottom quartile during the last week of the month, evidence of some real caution toward risky assets.”
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