State Street Global Markets has released the results of the State Street Investor Confidence Index® (ICI) for March 2022 which shines a light into investors’ risk appetite.
The Global Investor Confidence Index decreased to 99.7, down 4.2 points from February’s revised reading of 103.9. The decrease was led by a 10.9 drop in European ICI to 82.9 as well as an 8.2 drop in Asian ICI to 88.7. North American ICI also dropped 3.3 points to 103.1.
The Investor Confidence Index was developed at State Street Associates, State Street Global Markets’s research and advisory services business, in partnership with FDO Partners. It 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. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors.
“Investor sentiment remained volatile, with a decline in March reversing some of the prior month’s gains, pushing global sentiment towards 12-month medians,” commented Marvin Loh, senior macro strategist at State Street Global Markets. “Intensified fighting in Ukraine, rising commodity inflation and continued hawkish rhetoric from central bankers all combined to curb investor enthusiasm. As anticipated, Europe saw the largest drop, weighed down by its proximity to the conflict along with uncertainty over energy deliveries from Russia. In contrast, the decline in North America was somewhat moderate in comparison, while Asia readings were complicated by the recent surge in COVID cases. Idiosyncratic factors are likely to continue effecting regional performance until greater clarity on the conflict and its impact on inflation are better understood.”