GLOBAL - Institutional investors in North America and Europe reined in their appetite for risk this month, according to new research from State Street Global Markets.
Releasing its results for July 2007, the State Street Investor Confidence Index found global investor confidence fell by ten points to a level of 87.0.
The investment research and trading arm of State Street Corporation noted North American institutional investors led the decline as their confidence dropped sharply from 107.0 to 95.8. This decrease was also mirrored in Europe where confidence declined from 98.1 to 90.4.
In contrast, Asian investors maintained their risk appetite at recent levels and the index for the region dropped marginally from 84.0 to 83.5.
Harvard University professor Ken Froot, who helped developed the index, said after the relatively strong readings recorded in recent months, it was unsurprising to see something of a reversal this month.
Froot said: “Even as the macroeconomic growth picture has crystallised the conflicting signals being sent by individual earnings announcements, coupled with the likelihood of tighter monetary conditions than previously expected, have resulted in a more cautious pattern of investor behaviour this month.”
Commenting on the factors behind the Asian results, Paul O’Connell, State Street Associates director, said: “Confidence among Asian investors has run somewhat below that exhibited among their European and North American counterparts for much of 2007.”
He added: “As a result, Asian investors have displayed less susceptibility to the turmoil in the sub-prime and credit markets.”
The State Street Investor Confidence Index measures investor confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors.
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