Institutional investors more confident on Asia and North America, State Street says

Volatility in financial markets in February centred on China and the knock-on impact of the drop in oil prices, but institutional investors were in fact looking elsewhere, according to State Street Associates.

State Street´s global investor confidence index retreated by 2.2 points from January´s level of 108.7 to 106.5 in February, led by a 13.2-point slide in the European ICI to 90.2 - its largest decline for 16 months.

However, the Asian ICI jumped by 9.2 points to 111.9 while a similar gauge for North America improved from 108.9 to 109.3.

Developed by Kenneth Froot and Paul O’Connell, the investor confidence indices were based on institutional investors´ actual changes to their long-term asset allocations.

The base level of 100 denoted a 'neutral' level of risk-apettite, at which investors were neither increasing nor decreasing their allocation, State Street said in a statement.

“The 13-point fall in the confidence of European investors was the sharpest in 16 months. With banking and government credit spreads under pressure once again, this decline in European confidence highlights the pressing need for additional policy measures in the region,” said Michael Metcalfe, senior managing director and head of Global Macro Strategy, State Street Global Markets.

“Moving forward, all eyes will be focused on the European Central Bank and the Federal Reserve’s March meetings as the global growth outlook remains a key concern for investors,” Froot added.