State Street: Confidence Among Institutional Investors Dips in September

Despite a rally in equities, investor confidence has fallen in Europe and the US in September, according to research by State Street Global Markets (SSGM).

(September 29, 2010) — New research by State Street Global Markets (SSGM) shows that confidence among institutional investors has fallen in Europe and in the US in September.

SSGM, the investment research and trading arm of State Street Corporation, released data as part of its monthly Investor Confidence Index. The firm revealed that its global investor confidence index showed a four-point decline in September to 88, down from 92 in August, with anything below 100 implying bearish sentiment among State Street’s large institutional clients.

While European investors’ confidence dropped to 97.2 from 98.4, North America index fell the most, losing 7.3 points, partly as a result of a waning US economy over the summer. Meanwhile, confidence among Asian investors rose to 107.9 from 103.5.

“August marks the fifth consecutive month that the Index has remained below the neutral level of 100,” said Harvard professor Ken Froot, a co-developer of the index, in a statement. “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.”

State Street’s Paul O’Connell added: “…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.”

State Street’s indexes are derived from movements in about $19 trillion of assets the firm holds as custodian and administrator for institutional investors.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href=''></a>; 646-308-2742